Europe’s Series B problem – and how to avoid it

European venture is on the uptick. Deal value returned to growth in the first half of 2026, reaching €44 billion, a run rate that implies a 27.1% rise on last year if it holds, with AI absorbing 60.2% of every euro invested. For a founder who spent 2024 and 2025 chasing term sheets that never materialised, that should feel like relief.

Break the same data down by series rather than by headline, though, and one round stands apart from all the others. Pre-seed funding is up. Seed is up. Series A is up. Series C and Series D are up enormously. Series B is down. It is the only point in the entire European funding chain where capital is contracting rather than growing.

That matters more than its size suggests, because Series B is where a DeepTech company stops being an impressive technical result and starts being an industrial business. It is the round that pays to turn a technology that works into a product that can be made in volume, at a unit price customers will actually pay. Losing ground at Series C is a valuation problem. Losing ground at Series B is an existential one, and it is happening quietly underneath a headline that says the opposite.

This piece sets out what the latest data actually shows, why Series B is the specific point where European DeepTech is most exposed, where the money went instead, who moved it, and why the same figures for the United States tell a startlingly different story.


The one round that shrank

Compare the first half of 2026 against last year on a run-rate basis and the pattern is unambiguous. Measured by capital invested, European Pre-seed funding is up 14%, Seed up 28%, Series A up 22%, Series C up 120% and Series D and beyond up 133%. Series B is down 6%.

The share figures point the same way. Series B has fallen from 27.7% of European deal value to 17.9%, its lowest share in the past decade by a wide margin, with the previous floor being 20.0% back in 2016. Series A also softened, from 28.8% to 24.2%, but that’s within its normal range and it was lower as recently as 2021. Only Series B is at a decade low, and only Series B is shrinking in absolute euros.

Deal counts show where the pressure is being applied. European Series B rounds are running about a third below last year's pace, against a 15% decline at Series A, while the average Series B round grew from roughly €44 million to €62 million. Fewer companies are getting through, and those that do are raising more. Series B has not disappeared. It has become considerably harder to reach, and considerably more decisive when you do.

These are half-year run rates rather than settled annual figures, and deal counts are typically revised upwards as reporting catches up, so the volume declines are likely to look less severe in time. But the direction, and the gap between Series A and Series B, is not in doubt.


Why this round, and why DeepTech feels it hardest

Series A generally rewards evidence: a system that works, early customers who will say so, and a credible route to more of them. That is demanding, but it is a test a strong technical team can pass on the strength of the technology itself.

Series B asks a different question, and in DeepTech it is a brutal one. It funds industrialisation: the pilot plant, the first production line, the fab capacity, the qualification and certification work, the move from something that works once under controlled conditions to something that works a thousand times at a price someone will pay and at a margin that will excite investors. This can be the most capital-hungry phase in the life of a DeepTech company and, awkwardly for investors, one of the least de-risked. The science is settled by then. The engineering economics are often not.

It is worth being precise here, because the software version of this argument does not transfer. In enterprise software, Series B is usually about expanding from a beachhead market into the mainstream market beyond it, one that demonstrably exists. In fusion, quantum, novel materials or semiconductors, there is often no mainstream market to attack yet, and the company is instead being asked to prove it can build at industrial scale before anyone can buy at industrial scale. That is a far harder proposition to underwrite, which is precisely why capital retreats from it first. It is also the gap where good science becomes a failed company, a pattern we have examined before.


Where the money went instead

The capital has not left the market. It has moved to the two places where outcomes feel more certain, and it has moved decisively. Rounds of €25 million or more now account for 77.8% of all European deal value, up from 66.2% a year ago. Series C and Series D absorbed the bulk of the increase, more than doubling in value.

At the other end of the market, Seed reached a record 11.5% share, which sounds like good news for founders at the start of the journey until you look at the composition. Ineffable Intelligence, an AI lab founded by a former DeepMind researcher, took a €943.1 million Seed round in April, and Advanced Machine Intelligence raised a similar figure - two companies that are seed-stage in name only. Rounds like these are increasingly bid up by American crossover investors, the large funds that invest across both public and private markets and are now reaching down into Europe's earliest stages.

So, the reported distribution is being inflated at the top by mega-rounds and at the bottom by a handful of enormous Seed rounds, while the round in between, the one that turns research into manufacturing, is the only one contracting.


Who is doing the reallocating

The composition of the investor base explains a good deal of this. Corporate venture arms now take part in 62.1% of European deal value, and non-traditional investors, meaning corporates, hedge funds and sovereign money, in 84.7%, and they concentrate that firepower in the largest and latest rounds where the outcome already feels contained. Alongside them sit the crossover funds bidding up the marquee Seed rounds.

Growth in European funding is therefore concentrated in pools with little appetite for a Series B. Strategic capital gravitates towards a proven product it can attach to its own business. Crossover money wants either a marquee name at the outset or a company close enough to an exit to be priced against public comparables. A first-of-a-kind production line, three years away from revenue at scale, suits neither. Research into European climate tech, where the same dynamic bites, describes a continent crowded with small early-stage funds but short of the mid-sized vehicles able to write the $25-100 million cheques a Series B demands. That shortage leaves the round without a natural domestic owner.

American investors are the clearest exception, and for European founders the most useful one. US investors have climbed to near parity with the UK as the most frequent participants in European deals, a measure of how often they appear rather than how many euros they supply, and the mainstream American venture funds within that group remain among the few investors anywhere still funding Series B rounds at scale, as their own market demonstrates.


America raised the same bar and paid for it anyway

The obvious conclusion would be that late-cycle AI mania has hollowed out the middle of every venture market. The American figures say otherwise, and this is the most uncomfortable comparison in the data.

The United States is also doing fewer Series B rounds, about a fifth fewer than last year's pace, and its surviving Series B rounds have grown dramatically, with the average nearly doubling from roughly $51 million to $97 million. In that respect the bar has risen on both sides of the Atlantic. But the capital behind it has moved in opposite directions. American Series B value is running about 52% above last year. Europe's is running 6% below.

Share-based comparisons obscure this, which is worth watching for in the coverage. US Series B has slipped from 15.8% to 12.5% of American deal value, which looks like the same retreat until you notice that Series D and beyond now takes 65.5% of all US deal value. The American middle is shrinking only as a proportion of a market whose top end grew enormously, while the cash flowing into it rose by half. Europe's is simply receiving less money.

That leaves European DeepTech dependent on capital raised outside Europe. Seventy per cent of late-stage DeepTech capital in Europe already comes from non-European investors, most of it American, and Europe invests up to 3x less per capita in late-stage venture capital than the US, a shortfall that bears hardest on capital-intensive companies. It is the scale-up gap we have examined before, pushed an entire round earlier.


Building towards a round that has moved

If Series B is now the hardest round in Europe to raise, it has to be planned for from the first day of Seed rather than approached when the time comes.

That starts with treating Seed as a phase rather than a single round. Several raises, each larger than founders were once used to, are increasingly needed to build evidence earlier, so that the company arrives at its Series A with real commercial momentum behind it rather than merely a fundable story. Momentum is what carries a company quickly into a Series B conversation instead of stranding it between the two.

It also means expecting more steps along the way, not skipping the Series A but building deliberately through it, and reaching Series B on less capital than an American equivalent would burn, because in this market capital efficiency is rewarded in its own right.

And it means identifying, and courting, the specific investors capable of leading a €60 million round long before the cash runs short. For most capital-intensive UK companies that will mean American investors, approached early enough to build a relationship rather than late enough to need a rescue.

Series B is now larger, harder to reach, and for many capital-intensive companies it will have to be found outside Europe. The founders who come through will be the ones who started building towards it while they were still raising at Seed.
 

 
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