Europe's Public Investment in VC and Scaleups: A Massive Undertaking
Europe is pouring tens of billions of euros into venture capital (VC) and scaleup funding, aiming to unlock up to €80 billion across the continent. This significant investment comes through various initiatives, including:
- European Investment Fund (EIF) raising a €15 billion fund of funds called ETCI 2.
- Germany’s WIN initiative targeting €12 billion by 2030.
- France’s Tibi programme pledging €7 billion, with 92 VC and growth funds labelled.
- European Commission’s Scaleup Europe Fund deploying €5 billion.
- European Innovation Council (EIC) allocating a €10 billion budget through 2027.
This influx of public and publicly mobilised capital exceeds previous European attempts, totalling over €80 billion. However, the question arises: will this money solve the existing issues or create new challenges?
The Funding Gap and Its Roots
European venture capital investment reached €66.2 billion in 2025, a fraction of the US figure. The disparity is more pronounced in later-stage funding, with Europe having far fewer scaleups and unicorns compared to America. This structural gap can be attributed to limited participation from European pension and insurance funds (7%) and sovereign wealth funds (1%).
The EIF has been instrumental in bridging this gap, supporting 25% of all European VC investments and half of the VC-backed startups annually. ETCI 1, its previous fund of funds, raised €3.9 billion, backing 14 funds with more than €1 billion each, including unicorns like DeepL, TravelPerk, and Framer.
Destination of the Funds
ETCI 2 aims to operate at a much larger scale, backing around 100 funds, from mid-size vehicles to mega funds, with an investment capacity of up to €200 million per company. The Scaleup Europe Fund, separate from ETCI, focuses on strategic technologies: AI, quantum computing, semiconductors, robotics, autonomous systems, energy, space, biotech, and advanced materials. Five managers were shortlisted for this fund, including EQT, Northzone, Eurazeo, Atomico, and Vitruvian Partners.