A fragmented playing field
The challenges are well documented. While Europe is producing more startups than ever, the transition from early-stage to growth remains difficult. Seed and Series A funding are relatively accessible, but Series B and beyond are often led by non-European investors. Around 82% of European scale-up deals already have a foreign lead investor, and many successful founders eventually move their companies to the U.S. to access the funding and market they need.
The reasons are structural: fragmented capital markets, cautious pension funds, complex insolvency regulations, and unequal rules for employee stock options.
Sector-wise, Europe’s position is mixed: AI lags behind the U.S./China in investment and scaling; Biotech IPOs are smaller; Cleantech is competitive in innovation but struggles with scaling production, and Defense tech is a fast-growing outlier, with a strong rise in venture capital since 2022 – and more is on the horizon.
What Europe still lacks
Engines for venture creation tied to markets. Europe needs repeatable capacity to build companies around universities and corporates that can rapidly convert intellectual property into customers, especially in deeptech.
Bridge capital for “first-of-a-kind”. Hardware pilots (factories, robotics, photonics, climate tech) struggle through the “infrastructure valley.” Blended finance and anchor customers can help.
A tighter triangle of public funds, corporates, and private VCs. Winning strategies combine early risk mitigation (public), market access (corporates), and scalability discipline (VC/growth).
Still, Europe is not standing still. Public actors like the European Investment Bank, InvestEU, and national development banks are injecting record amounts into the system to attract private capital and build a more robust capital base. Corporates like ASML are beginning to see themselves not just as buyers, but also as investors. New venture-building models show how startups can reduce the risk of failure.
