Why Europe Needs a Different Kind of Venture Capital

Europe's venture ecosystem has undergone a genuine transformation. A decade ago the conversation was dominated by the question of whether Europe could produce world-class technology companies at all. That question has been answered. Spotify, Klarna, UiPath, Adyen, Wise — the evidence is abundant. European founders can build global companies.

But there is a second, harder conversation that the success stories have obscured. The question is no longer whether great companies can emerge from Europe — they clearly can. The question is whether the venture infrastructure being built around those companies is the right infrastructure for the next generation of European growth.

The Americanisation of European Venture

European VC has, to a significant degree, adopted the playbook developed in Silicon Valley over the past forty years. That playbook has produced extraordinary results in one specific context: an abundant talent pool clustered in a small geography, a culture of serial entrepreneurship, deep connections between academic research and commercial application, and a regulatory environment that treated equity broadly as a social good.

Europe is not that context. The talent pool is deep but distributed across twenty-seven different legal and regulatory jurisdictions. The culture of risk-taking and failure-tolerance varies enormously between Berlin, Warsaw, Lisbon, and Amsterdam. The regulatory environment, while improving, still creates friction that has no American equivalent.

Copying the American model without adapting it to European conditions produces a system that serves the European companies that most look like American companies — centralised, English-speaking, focused on B2C consumer markets or enterprise SaaS — and underserves the enormous number of European companies that do not.

The Geographic Concentration Problem

European venture capital is heavily concentrated in London, Berlin, Paris, Stockholm, and Amsterdam. These are extraordinary cities — innovative, international, with strong talent pipelines and mature startup ecosystems. But they represent a tiny fraction of European economic geography.

Most of European industrial strength — the Mittelstand manufacturers of Germany, the precision engineering companies of northern Italy, the agricultural technology emerging from Eastern European markets — sits outside the traditional VC cluster cities. It builds more slowly, thinks more conservatively about equity, and is often invisible to investors who filter primarily by geography and sector.

This is not just an equity access problem, though it is that. It is a missed opportunity of enormous scale. The companies that will define European competitive advantage in the next twenty years may not look like the last twenty years' winners. They may emerge from sectors and geographies that current venture infrastructure is poorly equipped to serve.

The Capital Continuum Gap

Europe has a reasonably functional seed ecosystem and a growing late-stage ecosystem. What it lacks is a well-funded, thoughtfully managed growth equity layer — the patient capital that helps companies scale from €10M to €200M in revenue without being pushed into an American exit or a premature IPO.

Founders in this stage face a binary that does not serve them well: raise from a US growth fund and implicitly commit to a US-style scaling path, or list on a European exchange that may not have the analyst coverage or liquidity profile their company needs. The middle path — European institutional growth capital with sophisticated operational support — exists in pockets but is not yet scaled to the demand.

Who Gets to Allocate Capital?

The diversity question in European venture is improving but remains structural rather than cosmetic. Women constitute less than fifteen percent of decision-makers at European VC firms with allocation authority. The proportion of fund managers from non-traditional European backgrounds — first-generation immigrants, founders from Eastern Europe, managers without elite university credentials — is lower still.

This matters not because diversity is a goal in itself, though the moral case is straightforward. It matters because patterns of pattern-matching reproduce themselves. Investors fund founders who remind them of successful founders they have known. If the investors making decisions have had similar experiences and backgrounds, they will systematically fund a narrower set of futures.

Europe has an extraordinary diversity of experience, perspective, and cultural context to draw on. A venture ecosystem that reflects that diversity will allocate capital more accurately, discover opportunities in more places, and produce more resilient funds. One that does not will continue to leave value on the table.

What Better European Venture Looks Like

The European venture ecosystem does not need to become more American. It needs to become more European — which means building capital structures suited to longer development cycles, supporting companies that are building deep technical moats rather than growing fast and flipping, investing in geographies and sectors that are currently underserved, and building GP teams that reflect the full range of European human capital.

It means LPs who are willing to be patient — universities, sovereign wealth funds, family offices with multi-generational time horizons — and who hold GPs accountable not just for returns but for the quality of the ecosystem they are building.

And it means investors who are genuinely interested in Europe as Europe, not as a cheaper version of somewhere else. The companies that will matter most to European citizens over the next generation are being built right now. The question is whether the capital infrastructure we are building today is equipped to find them. I believe it can be — but not if we simply paste a different flag on an existing playbook.