Key Takeaways
- • European private equity and venture capital fundraising reached €68 billion in H1 2026, up 6% on revised data for H1 2025, according to Invest Europe and Arthur D. Little.
- • Deal activity weakened: €43 billion was invested in H1 2026, down 35% year-on-year on revised data, driven by softness in buyout activity.
- • 43% of LPs expect increased allocations to Europe over the next three years due to Washington's trade stance, versus 30% expecting lower US allocations.
- • 75% of GPs expect higher investment in defence, which is now the top target sector, while 96% see AI-supported work practices as the largest operational impact over the next 12 months.
- • Continuation fund fundraising fell 78% to €2.4 billion from the H1 2025 record of €11.3 billion, and VC investment hit a half-year record of €11.5 billion.
Summary
Invest Europe, the association representing Europe's private equity, venture capital and infrastructure sectors, and global consultancy Arthur D. Little (ADL) released 'Investing in Europe: Private Equity Activity H1 2026' and 'The Insight: State of the European Private Equity Industry 2026', an annual market sentiment report. Together the publications show higher fundraising for European private equity and venture capital year-on-year, stronger allocation expectations for Europe, and declining appetite for the US and Asia.
Fundraising reached €68 billion in the first half, up 6% on revised data for the same period last year and ahead of the €54 billion announced at the same point in 2025. Buyout fundraising rose to €54 billion from €42 billion, with growth in the France & Benelux and DACH regions. VC fundraising was €7.9 billion, in line with H1 2025. Final figures are expected to rise as more data is reported. Investment told a different story: €43 billion was deployed, down 35% on revised data, driven by softer buyout activity. VC investment was a bright spot, reaching a half-year record of €11.5 billion, 11% above revised H1 2025 levels. Divestments, measured at investment cost, fell to €13 billion, in line with last year.
The survey attributes these shifts to geopolitical volatility, including Middle East conflict, energy supply shocks, rising interest rates and trade uncertainty. Forty-three per cent of LPs expect higher allocations to Europe over the next three years because of Washington's trade stance, against 30% expecting lower US allocations. Twenty-nine per cent expect higher European allocations due to conflict in the Gulf. Seventy-five per cent of GPs expect higher defence investment, making it the top target sector, while 53% see more investment in aerospace. Deeptech and AI ranks second at 62%, and energy and utilities has risen to fourth on AI-buildout demand.
AI dominates managers' agendas. Ninety-six per cent of GPs expect AI-supported work practices to have the largest operational impact over the next 12 months, and 82% say AI will be their teams' biggest focus, ahead of exits. Continuation vehicles (CVs) cooled: fundraising fell 78% to €2.4 billion from H1 2025's €11.3 billion record, and CV investment dropped 65% to €1.3 billion. Defence investment reached €2.7 billion, more than double H1 2025, and deeptech investment rose 35% to €8.5 billion, driven by the UK & Ireland. Sixty-nine per cent of GPs say the industry is already consolidating. Eric de Montgolfier, CEO of Invest Europe, said Europe's strength, stability and predictability are drawing capital to European private markets, while Jonas Fagerlund, Partner at Arthur D. Little, said AI has moved from 'nice to have' to 'must have' for the industry.
Fundraising reached €68 billion in the first half, up 6% on revised data for the same period last year and ahead of the €54 billion announced at the same point in 2025. Buyout fundraising rose to €54 billion from €42 billion, with growth in the France & Benelux and DACH regions. VC fundraising was €7.9 billion, in line with H1 2025. Final figures are expected to rise as more data is reported. Investment told a different story: €43 billion was deployed, down 35% on revised data, driven by softer buyout activity. VC investment was a bright spot, reaching a half-year record of €11.5 billion, 11% above revised H1 2025 levels. Divestments, measured at investment cost, fell to €13 billion, in line with last year.
The survey attributes these shifts to geopolitical volatility, including Middle East conflict, energy supply shocks, rising interest rates and trade uncertainty. Forty-three per cent of LPs expect higher allocations to Europe over the next three years because of Washington's trade stance, against 30% expecting lower US allocations. Twenty-nine per cent expect higher European allocations due to conflict in the Gulf. Seventy-five per cent of GPs expect higher defence investment, making it the top target sector, while 53% see more investment in aerospace. Deeptech and AI ranks second at 62%, and energy and utilities has risen to fourth on AI-buildout demand.
AI dominates managers' agendas. Ninety-six per cent of GPs expect AI-supported work practices to have the largest operational impact over the next 12 months, and 82% say AI will be their teams' biggest focus, ahead of exits. Continuation vehicles (CVs) cooled: fundraising fell 78% to €2.4 billion from H1 2025's €11.3 billion record, and CV investment dropped 65% to €1.3 billion. Defence investment reached €2.7 billion, more than double H1 2025, and deeptech investment rose 35% to €8.5 billion, driven by the UK & Ireland. Sixty-nine per cent of GPs say the industry is already consolidating. Eric de Montgolfier, CEO of Invest Europe, said Europe's strength, stability and predictability are drawing capital to European private markets, while Jonas Fagerlund, Partner at Arthur D. Little, said AI has moved from 'nice to have' to 'must have' for the industry.
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