News - November, 2025

How we can 10x European Tech Investing, again

Europe has made huge progress in technology investing, showing 10x growth in investment levels over the past decade. The next challenge is to scale even further and grow the European economy through technology and entrepreneurship. This requires unlocking pension fund capital, simplifying regulations, and creating a unified capital market for European technology companies to prosper in the long-term.

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European investment activity over the past decade

Current European growth investing is at record levels compared to the past, except for the two pandemic years. This said, while the invested amounts are growing, the number of deals is declining, and the average deal size is increasing.

Exit activity tells a mixed story. While deal numbers are declining, the last three years will still match or exceed 2018 in both value and volume. But when comparing exits to the high amount of capital raised in previous years, the relative exit activity has been trending downwards for a while, except for 2021 and 2022. Pooled DPI is also modest - barely above 1 for 2008-2013 vintages and just 0.37 for 2014-2022 vintages.
 
This especially affects European growth equity fundraising. On paper, it looks strong - but a few very large raises distort the picture. In 2025, one fund accounted for 60% of all capital raised, and in 2024, eight funds made up more than half. Too few European growth funds are being raised, forcing more mature companies to raise in the US or Asia instead.

So, looking at investment activity, exits, and fundraising together, European growth equity is doing reasonably well, but not yet great. But exponential growth works quietly - 10-15% growth doesn’t feel like much, but over 10 or 20 years, it adds up.
 
10x growth in investment levels - and the next 10x ahead

European Tech is compounding far faster than we think. In 10 years, investment levels have expanded by 10x, and the number of tech companies in each stage has also grown. 

Source: Atomico, Crunchbase, Dealroom.co

We’ve grown 10x from 2015 to 2025. Now the challenge is to do it again, because in the end, innovation drives prosperity.

A recent McKinsey study identified 12 “innovation arenas” that emerged between 2005 and 2019. Together, their share of total global economic profit grew from 9% to 49% in just 15 years. In other words, cutting-edge technology captures a growing and disproportionate share of economic value. McKinsey now highlights 17 new arenas that are expected to deliver similar shifts over the next 15 years - including AI, semiconductors, space, cybersecurity, and nuclear fission.

Yet Europe faces a familiar challenge. Our best technical talent still moves abroad, chasing better pay and opportunity. Our scale-ups depend heavily on foreign capital. And our most successful companies too often end up acquired or listed overseas.

The question isn’t whether Europe can grow another 10x - it’s whether we’ll create the conditions that make it happen.
 

Four key steps for European tech growth 

If we want to see more high-growth European scale-ups, four things must happen. 

1.  Activate growth capital

Everything starts with capital, and it cannot be emphasized enough. So, the first thing we need to do is activate growth capital.

When we look at the geographic origin of funds by round size, a clear pattern emerges. Smaller rounds are typically financed with European capital, but once companies scale and need larger amounts, most of the money comes from abroad. The reason is simple: There are at least 7x more large-size (>€600m) tech funds in the US than in Europe. Few funds in Europe can write a €50m check. Very few can write a €100m check. On average, VC-backed companies in the US receive 5x more backing than their European peers. This results in many European companies not reaching their full potential because they are being starved of growth capital.

When comparing the LP base of US and European tech funds, the big difference are long-term financial investors - endowments, pension funds, insurances and fund-of-funds. In the US, they are the core investor base for the tech industry and account for 70% of the capital. In Europe, however, they remain cautious and account for only 30% of the capital. This results in far less long-term capital for tech - held back by regulation and limited familiarity with the asset class.

The solution lies in mobilizing Europe’s long-term private investors. Consider this: In the US the total AUM in pension funds and insurances is $32tr. 10.3% of that is invested in technology. In Europe the total AUM in pension funds and insurances is $27tr., but only 1.6% of that or $426 bn is invested in technology. Assuming the European asset base grows by 4% annually and that in ten years the share of capital going to technology grows to 10.9%, then as a result $4.3tr would be invested in technology. That is 10x the amount today.

Source: Speedinvest

So, with the right rules and commitment, European institutions could invest 10x more in technology, and by doing so enable massive growth of the European tech economy.


2.  Retain and attract talent

The next thing we must do is to retain and attract top talent. That means rewarding people competitively, in both stock and cash.

When it comes to software developers, Europe has more than the US. The US need to import talent and do so very successfully. Over half of US-based AI developers and related AI talent are foreign-born, and about two-thirds of current graduate students in AI-related fields at US universities are international students - many from Asia, but also from Europe.

One reason for European developers leaving is their compensation. On average, AI developers in the US earn 2.5x more than their European peers. Europe is underpaying its tech talent and making it easy for others to poach them. Talent is here - the challenge is keeping it.


3.  Improve regulatory and legal framework

Next, we need to improve the European regulatory and legal framework. We need a framework built for speed and agility, not bureaucracy. In the US, the system is simple and predictable, while in Europe it’s fragmented.
 
US Companies are incorporated as Delaware Inc. - everyone knows the rules. In Europe, there are 27 different legal frameworks, some tech-friendly, many not. The same applies to AI regulation. US policy aims to make it easy for companies and enables innovation. Europe’s AI Act focuses on consumer protection, which is burdensome for companies, especially smaller ones that can’t afford teams of lawyers.

Labor laws are another example. US “employment at will” gives startups flexibility, while European labor laws are made to protect employees, but make recruiting slow and restructuring expensive. And while stock options are mainstream and tax-efficient in the US, they remain complex and unattractive in most of Europe. Finally, US FDI rules are rarely an issue, as most exits happen within the country. In Europe, foreign buyers are common, which makes FDI regulations a constant hurdle.
 
There’s a lot governments can do to make life easier for high-growth tech companies and it doesn’t cost money, just a pro-tech attitude.


4.  Unify capital markets

Lastly, we need to unify our capital markets. We need deep and liquid capital markets, where large technology companies can grow, thrive, and stay. Today, Europe has around 58 stock exchanges. The US has two stock markets.

1/3 of European Tech Companies go public in the US rather than in Europe. And the 25 most successful European tech IPOs in the US account for over €500bn in market cap. These companies are the future consolidators of Europe’s tech industry - and they should be based here, not in the US.
 
But none of the European stock exchanges offers the liquidity, skilled institutional investor base, or regulatory framework that ambitious tech companies need. As a result, many list in the US - most recently, Klarna. Europe needs a single, unified market that mirrors the NASDAQ. A home for European technology companies.

Summary

Over the past decade, European tech has proven its strength in innovation, entrepreneurship, and resilience. What it needs now is scale – the ability to grow companies that lead globally while staying rooted in Europe. The next ten years must focus on leverage: unlock institutional capital, simplify regulation, and strengthen capital markets. Put together, these changes could lead to a golden decade of 10x in growth for European technology.  
 

by Roland Dennert, Managing Partner at Cipio Partners