What's the deal? The Tech M&A & Fundraising Newsletter - Steady Hands In Stormy Waters
Geopolitical Tectonics, AI's Inflection Point, and the Private Equity Powder Keg: how to navigate an already rollercoaster 2025?
Welcome to What's the Deal? - your monthly deep dive into the strategic currents defining the tech investment landscape. This edition unpacks the volatile market dynamics of 2025, with an exclusive look at how geopolitical shifts and technological disruption are reshaping M&A and fundraising strategies. Plus, our proprietary Cybersecurity industry analysis shows some optimistic signs for EMEA and general recovery of the market.
A note from the Editor - CEO Claire Trachet
"Volatility" is the word I would use to label the start of 2025. We've witnessed one knee-jerk reaction after the next, further muddying already turbulent waters - making the journey for Founders even more "interesting" in recent years. From a Trump trade war to an alleged Sputnik moment for AI, 2025 has made it all too easy to get caught in a whirlwind of spinning thoughts and reactions.
But, in such seemingly volatile environments, my advice to Founders is that strategic discipline with a long-term outlook supersedes reactive manoeuvring and pays dividends, if you’re willing to keep your focus for long enough. So, where are we heading next?
The M&A landscape is experiencing a nuanced renaissance. On the one hand, PwC data reveals high-value transactions over $1bn surged 17% over last year; a sign that big players are looking at consolidation to strengthen their foothold in their industries. However, mid-market and smaller deals remain sluggish, particularly in Europe, where fragmented funding strategies continue to hinder DeepTech growth in areas like Quantum and AI.
The macroeconomic backdrop also presents some notable challenges. The UK's revised 1% growth forecast (with continued threats of a recession) and tightening financing conditions have created further complications around deal dynamics. However, sectors like Cybersecurity and AI are well-placed to weather the storm, propelled by national security imperatives and intensifying global technological competition.
There are encouraging signs if you focus beyond the daily drama. An example is the US$1.6trillion in dry powder that private capital firms were sitting on last year, according to Preqin's latest analysis. A capital reservoir of this size will supersede the geopolitical fault lines of 2025 and provide ample opportunities for companies with a diligent focus on fundraising or a strategic exit. In these turbulent times, timing and agility are of the essence to navigate toward safe harbor, so perhaps “Focus amongst Volatility” should be the mantra for Founders in this part of 2025.
Cybersecurity in particular really excites me, but our proprietary analysis (more on that below) reveals that despite having one of the best talent pools globally, Europe is still struggling compared to North America. This sector could be instrumental in challenging US technological hegemony and establishing a distinctive offer, if only we had a more joined up investment approach and worked together to keep our most innovative companies scaling without making the water jump.
Cybersecurity Q4 analysis
With our expertise in Cyber - most recently having led YesWeHack's €26m Series C funding round last year - we wanted to take a closer look at the global landscape and where the sector is heading. Despite Europe’s world-class talent pool, the significant funding gap with North America threatens long-term growth. And yet... Q4 has shown strong news in terms of Series C in Europe! Something to celebrate as the continent has struggled to grow the later stages of tis ecosystem historically. Our proprietary analysis highlights the need for Europe to take a more coordinated investment approach - both to keep its most innovative companies from moving to the US and to turn cybersecurity into a key driver for technological leadership.
A warning for Europe
Funding rounds: Amidst a strong growth in funding amount, driven regionally by North America and globally by later stages (Series B & C), Europe saw a (22)% drop in cybersecurity funding rounds and a +17% increase in funding amount, supported by a rebound in average size of funding rounds.
Meanwhile, North America experienced a +49% increase in funding amount and APAC grew by +18%.
Early-stage slump: Seed declined in both number of rounds and funding amount - (31)% and (27)% respectively - reaching the trough in 2024 when later stages have rebounded. This strong decline in Seed rounds signals potential impact on Series A deal pipelines in 2025/2026.
Overview of funding rounds by geography.
Overview of funding rounds by maturity.
An encouraging picture for EMEA Cybersecurity at Series C
The number of Series C in EMEA remained stable in 2024 v. 2023 at 23 v. 22 transactions respectively. However, Europe saw a strong improvement in deal count (doubling from 3 to 6), even overtaking North America in Q4 - albeit with smaller deal sizes.
Yet it's only less than 25% of the global Series C deal count that were recorded in Europe (EMEA) in 2024 - highlighting the critical need to grow a late-stage ecosystem in the region.
Zoom-in Cybersecurity Series C fundraisings.
Outlook for 2025 - Time to Bridge the Gap
Our Q4 analysis highlighted serious concerns about Europe's growing gap in Cybersecurity funding v. North America, despite the very positive news from Q4 at Series C.
Seed rounds have been reducing, signalling potential pipeline tension at Series A in 2025. A long-term stagnation would limit Europe's ability to scale and compete on the global stage in the coming years. A continued and concerted effort to fund the talented European Cybersecurity companies will be crucial to maintain technological leadership in the region and grow a late-stage ecosystem capitalising on the region's large talent pool and strategic opportunities.
Monthly News Roundup
Trachet in the news
→ What I learnt … about getting the best price for your company - The Times
The Times related Claire's key advice to Tech founders looking for new investment or a sale: (i) do your homework, (ii) know your numbers and (iii) be kind to yourselves.
What I learnt… About getting the best price for your company by Richard Tyler - Entrepreneurs Network Editor for The Times
What we've been reading
→ EU will stand up for itself in face of Trump tariffs threat, Macron says - The Guardian
Exploring what Trump's new tariff threats could mean for Europe, from rising prices to a potential trade war and strained EU-US relations.
→ The long hard slog to reach the goal of faster growth - Financial Times
Reflections on the UK's slow growth challenge, exploring whether better infrastructure, regulatory reform, and higher investment can help - or if it's destined to remain a long, uphill battle.
→ UK revives plan for Oxford-Cambridge Arc - Financial Times
An overview of the Government’s relaunch of the Oxford-Cambridge Arc project, aiming to boost economic output in the science-rich region with new transport links and housing, though success hinges on overcoming local opposition and infrastructure challenges.
→ DeepSeek’s ‘aha moment’ creates new way to build powerful AI with less money - Financial Times
A deep dive into DeepSeek explaining clearly how it disrupted the AI landscape ("Reinforcement Learning”), sending shockwaves to giants like OpenAI and Meta.
We’re keen to hear about the key challenges (or opportunities!) shaping your company’s objectives in 2025. Email us at claire@trachet.co for more information on topics you'd like to see discussed in future issues of What’s the deal?
Charts note: The other category includes all countries that aren’t in APAC, EMEA or North America. Sources: Crunchbase, Trachet Advisory.
Charts note (Series C): Charts are based on rounds with disclosed amounts. Secret Double Octopus had 2 rounds in Series C (one with an undisclosed amount) Excl. Unseenlabs (IoT Space), Ingeek (Network Security Consulting Services), Strider Technologies (data software) and Neuron Network (Semiconductor Manufacturer) in the refine analysis despite being included in Crunchbase data. Sources: Crunchbase, Trachet Advisory.