Europe's startup scene feels back—yet the numbers say recovery is still incomplete, with fundraising as the real bottleneck

# Europe's startup energy vs the numbers — and why Morocco's AI scene should care Walk into any major European tech conference and the mood feels buoyant again. Founders swap AI demos, and investors crowd the stages. Yet the venture data behind the scenes still looks cautious, especially compared with the United States. ## Europe feels back, but recovery is incomplete TechCrunch, citing PitchBook, estimates European startups raised €43.7B across 7,743 deals through Q3 2025. That pace would roughly match the already reset years of 2023 and 2024, which saw about €62.3B and €62.1B. Deal volume is holding, but it is not breaking into a new, aggressive cycle. The contrast with the US is sharp. By the end of Q3 2025, US venture deal volume had already surpassed its 2022, 2023, and 2024 totals. US venture appears to be re-accelerating faster than Europe, especially at later stages. Underneath the deals, fundraising is Europe's real bottleneck. Through Q3 2025, European VC firms had raised just €8.3B, tracking toward the weakest year in a decade. PitchBook analyst Navina Rajan puts it starkly. Fundraising is down roughly 50% to 60%. The money that is closing skews toward newer, smaller managers. Fewer big funds mean less dry powder for growth rounds and late-stage AI bets. Even with strong founder quality, a constrained GP layer slows the entire financing flywheel. For Moroccan founders, investors, and policymakers watching from across the Mediterranean, this European reset is more than gossip. It is a live case study of what happens when talent and ambition run ahead of capital formation. Morocco's emerging AI ecosystem faces many of the same structural questions, only with smaller buffers. ## Key takeaways - Europe's startup mood is optimistic, but VC fundraising remains far below peaks, so capital is the main constraint. - AI is the bright spot pulling global investors back to Europe, thanks to strong research and lower valuations than in the US. - High-profile exits like Klarna's IPO recycle capital, restore confidence in liquidity, and make future fundraising easier for European VCs. - Morocco's AI ecosystem has strong talent, improving infrastructure, and early startups, but faces an even thinner venture capital layer. - Founders and policymakers in Morocco should focus on global ambition, capital-efficient AI products, and credible paths to exits and recycled capital. ## AI is Europe's new magnet — a lesson for Morocco Despite the weak fundraising numbers, TechCrunch argues that Europe may be on the cusp of a turnaround. One reason is renewed US investor participation in European deals after a low point in 2023. That year, US funds joined only 19% of rounds. With AI valuations stretched in Silicon Valley, Europe suddenly looks like a relative bargain. Rajan describes the US AI scene as feeling almost impossible to enter at today's prices. Europe, by contrast, offers similarly ambitious AI research and applications at lower multiples. That combination of quality and value is attracting global capital that had briefly pulled back. Recent deals underscore the point. Swedish software startup Lovable just announced a $330M Series B. The round includes prominent US investors such as Salesforce Ventures, CapitalG, and Menlo Ventures. French AI lab Mistral raised a €1.7B Series C in September. Its investors include Andreessen Horowitz, Nvidia, and Lightspeed, among other global players. These examples show where the gravitational pull is strongest: frontier AI and AI-native applications that can compete globally. Europe's edge is not only engineering quality, but also pricing that feels sane compared with the hottest US names. Morocco's AI founders can tap this same logic by building high-calibre teams at competitive cost. They can position their startups as value-centric bets in global or regional AI markets. ## Klarna, exits, and why liquidity matters for Morocco Capital does not circulate without exits. TechCrunch points to Klarna's IPO as a critical psychological and financial milestone for Europe. The company raised around $6.2B over two decades before going public. Its listing sends a simple message to LPs and GPs: liquidity is back. When high-profile exits recycle cash to investors, fundraising becomes easier. LPs feel more confident backing new venture funds when they can point to realized gains instead of paper markups. In a Europe where fundraising is the weakest link, visible exits become a key ingredient for long-term recovery. Morocco's AI ecosystem is still too young to expect IPOs of that scale. Yet the principle holds at any stage. Even modest trade sales or regional listings can free up capital, reward early believers, and inspire the next generation of founders. ## Europe's cultural shift — and what it means for Moroccan founders European founders are also changing how they think. EQT partner Victor Englesson tells TechCrunch that more entrepreneurs now aim to build global category leaders, not just national champions. Role models like Spotify, Klarna, and Revolut have reset the reference point. This mindset shift matters for Morocco. The most interesting Moroccan AI companies will not restrict themselves to a single domestic market measured in tens of millions of people. They will target francophone Africa, the wider Middle East and North Africa, or even European customers from day one. Morocco has structural advantages here. Its talent pool is multilingual, spanning Arabic, French, and increasingly English. Its location and time zone make it a natural bridge between Europe and African markets. ## Morocco's AI foundations: government, hubs, and universities Morocco has spent years building digital foundations that now support AI. Broadband coverage and data centre capacity have improved, and major cities host growing tech clusters. These investments do not guarantee AI success, but they remove obvious infrastructure barriers. Startup hubs such as the Technopark network in Casablanca, Rabat, and Tangier give early-stage teams affordable offices, shared services, and community. Many residents are not pure AI startups, yet the environment helps data scientists mix with software engineers and entrepreneurs. That cross-pollination is essential for applied AI. On the public side, a dedicated Digital Development Agency coordinates national efforts on e-government and digital transformation. Its work on online services, open data, and digital inclusion lays groundwork for responsible AI deployments. Clear policies on data use, procurement, and experimentation can further accelerate trusted AI adoption. Universities play a central role. Institutions such as Mohammed VI Polytechnic University and leading engineering schools have expanded programs in data science, machine learning, and related fields. Partnerships between academia and industry are starting to generate applied research projects that can spin out into startups. Still, Europe's lesson is clear: public support can spark activity, but it cannot compensate for a thin venture layer. Without sufficient risk capital, promising AI projects risk stalling at pilot stage or being acquired early at low valuations. Morocco must avoid that trap. ## Morocco's AI startup landscape: early stage, real use cases Morocco's AI scene is young but tangible. Many early teams embed machine learning inside broader software or consulting offerings rather than branding themselves as pure AI startups. A smaller subset focuses directly on computer vision, natural language processing, and predictive analytics. One frequently cited example is Atlan Space, which develops AI-guided drones for maritime surveillance and environmental monitoring from a Moroccan base. Its technology helps authorities watch large coastal areas for illegal fishing and ecological risks. The company has attracted international attention and support. Other emerging verticals are also promising. In financial services and telecoms, machine learning supports credit scoring, fraud detection, and churn prediction. Logistics players use optimization algorithms to improve routing and fuel consumption, while retailers experiment with recommendation engines and demand forecasting. Agriculture and water management are particularly strategic. Morocco faces recurrent droughts and pressure on water resources, which makes precision irrigation and yield prediction compelling AI use cases. Research projects combining satellite imagery, sensor data, and machine learning could translate into impactful agritech startups. ## Practical AI in daily Moroccan life AI is also slipping into daily experiences, often through international platforms. Moroccan hotels and travel agencies rely on booking engines that use AI for pricing and recommendations. Customer service teams in banks and utilities increasingly deploy chatbots and automated assistants to handle routine queries in Arabic and French. In education, teachers and students are experimenting with generative AI tools for drafting content, translation, and tutoring. Some universities run internal pilots to help with grading, plagiarism detection, or personalized study plans. These experiments raise questions about ethics and bias, but they also build local literacy in how AI actually works. Within government, AI can help digitize archives, triage citizen requests, and improve allocation of public resources. Pilot projects that prove value in one ministry or municipality can then be replicated elsewhere. Europe's experience suggests that strong procurement frameworks and clear guardrails will be essential. ## Funding reality: Europe's bottleneck, magnified for Morocco For all the excitement, capital remains the biggest constraint. If Europe struggles to raise more than €8.3B for venture funds in nine months, smaller ecosystems will feel the pinch even more. Moroccan founders often rely on a patchwork of grants, family offices, regional funds, and a handful of local VCs. The danger is clear. Ambitious AI teams may move abroad seeking deeper capital markets, or structure their companies offshore while keeping engineering in Morocco. That would limit the long-term compounding benefits of local exits and successful founders reinvesting at home. To counter that risk, Morocco can draw three lessons from Europe's cycle. First, diversify financing sources, including development banks, corporate investors, and diaspora angels. Second, build transparent data on startup performance, which helps LPs feel comfortable backing local venture funds. Third, prioritize quality over quantity in public support programs, focusing scarce resources on teams with clear technical edge and market focus. ## How Moroccan AI founders can respond now Founders cannot control macro fundraising trends, but they can adapt strategy. Designing for regional or global markets from day one expands revenue potential without proportional cost increases. Multilingual products and services are a natural strength for Moroccan teams. Capital efficiency also matters. Open-source models, cloud credits, and partnerships with universities can reduce infrastructure and research costs. Careful sequencing of hiring and go-to-market can stretch each seed round further. Building bridges to Europe and the Gulf is another lever. Moroccan founders can pitch European VCs that are hunting for reasonably priced AI exposure. They can also engage Gulf funds that show growing appetite for African tech. Strong governance and clear metrics help overcome distance and perceived risk. Finally, teams should expect tougher due diligence and slower decision cycles. Europe's numbers show that investors are more selective, even when conference stages feel exuberant. Moroccan founders who prepare robust data rooms and clear unit economics will stand out. ## A shared cycle — and a chance for Morocco to leap Europe's startup scene feels energetic again, driven largely by AI and a new generation of globally ambitious founders. Yet the underlying numbers show an incomplete recovery, with fundraising as the true bottleneck. That tension between excitement and capital scarcity is familiar to every emerging ecosystem. For Morocco, this moment carries both warning and opportunity. The warning is that talent alone does not guarantee a thriving AI industry; recycled capital and exits matter too. The opportunity is to position Moroccan AI startups as efficient, globally relevant bets. Investors are widening their lens beyond overheated US markets. If policymakers, investors, and founders move in concert, Morocco can ride the next AI wave rather than watching it from the shoreline. The ingredients are present: technical talent, improving infrastructure, and real local problems that AI can help solve. Europe's experience offers a roadmap, and a reminder that the hardest part is still fundraising.