by Vittorio Sambuy
Europe doesn’t lack innovation. It has nothing to envy from the US on the raw inputs that matter: deep technical talent, world-class universities, dense industrial know-how, and a quality of life that attracts global founders. Europe is now home to ~35,000 early-stage tech companies, more than any other region — proof that the pipeline is full. (State of European Tech, Dealroom)
The strength: world-class inputs, real outcomes
Look past the headlines and you’ll find global leaders built on European foundations—ASML in lithography, Spotify in consumer tech, UiPath in automation, BioNTech in biotech—supported by a genuinely world-class academic base: a dense network of top engineering and tech universities (Oxford, Cambridge, ETH Zurich, EPFL, TUM, Imperial and more) that feed industry with exceptional technical talent. Add to that a large and growing STEM pipeline across Europe, and you get an ecosystem that now hosts 35,000+ early-stage tech companies, one of the largest pools globally—evidence that the innovation funnel is full.
The choke point: scale-up capital
Europe’s challenge isn’t ideation — it’s amplification. The growth-stage funding gap is ~$375B since 2015, largely because fewer European companies convert into the larger rounds needed to scale. That leaves EU startups about half as likely to raise growth rounds as their US peers. (State of European Tech Dealroom report, 2024)
This shortfall shows up most at the later stages (the $50M–$100M+ checks that create category leaders). On a global basis, mega-rounds ($100M+) dominate venture — and the US captures the lion’s share — reinforcing a scale advantage that compounds over time. (Venture Wrapped Dealroom Report, 2024)
The transatlantic drift: when the US capitalizes on EU innovation
When scale-up capital is scarce at home, founders follow customers and capital. A sizable share of migrating startups move to the US, and those movers account for a disproportionate amount of total startup value creation globally (Weilk S. & others, 2024). Index Ventures’ field guide reflects what we hear daily: European teams expand earlier and bolder into the US to access enterprise budgets and deeper growth financing — not because they lack innovation, but because the market plumbing is stronger (Index Ventures, 2024).
The valuation discount: risk or opportunity?
Underfunding doesn’t just slow growth — it compresses valuations. Across stages, European startups price at a 29–52% discount vs. the US, with the largest gaps at Seed and Series A. That’s painful for founders competing for talent — but it’s also a genuine alpha opportunity for investors who can underwrite European execution and help with US go-to-market (Equidam, 2025).
Why is this attractive for European investors now?
- Contained entry prices, higher potential upside. The same technical caliber at meaningfully lower prices creates favorable risk-adjusted return potential — especially in deep tech and industrial software where Europe’s strengths are pronounced (Equidam, 2025).
- Structural tailwinds emerging. Policymakers and market participants increasingly recognize the need to deepen growth capital pools at home — including mobilizing long-term savings and pension assets and improving capital-market plumbing (Goldman Sachs Asset Management, 2025).
- Corporate demand is real. Europe’s corporates are leaning into startup collaboration and corporate venturing as a route to innovation and procurement — precisely the flywheel scale-ups need to accelerate (EU publications, 2025).
The path forward (with less public money talk, more market muscle)
Closing the gap won’t be solved by public money alone. What matters most now:
- More private growth funds in Europe. We need larger, specialist vehicles that can routinely lead €25–€200M rounds from the continent — not just episodically. That means mobilizing institutional capital (pensions and insurers) into private markets and reducing the home-bias outflows to non-EU equities (Dealroom, 2025). Early signs of change are encouraging, with some large European pensions signalling increased allocations to higher-growth private assets at home. (Financial Times, 2025)
- Deeper corporate–startup relationships. Move beyond pilots into scaled procurement, co-development, and co-investment. The EU’s own analysis and industry research point to corporate venturing as a core lever for competitiveness; best practices are maturing fast (EU publications, 2025).
- Frictionless market access. Keep simplifying listings, secondary markets, and cross-border rules to reduce the penalty for scaling in Europe. Private capital follows predictable, efficient exits (McKinsey & Company, 2025).
What is our contribution
We were born and back this thesis with action:
- Bridging startups and corporates with Dealflow.eu. We connect Europe’s most promising innovators to corporates and investors — turning POCs into repeatable revenue and creating the commercial traction that de-risks scale-up rounds.
- Financing the best founders with our fund, Ventures.eu. We back financially EU-funded startups and invest at fair European entry prices, then help teams unlock large corporate customers, growth capital, and strategic partnerships through our investor and corporate network — exactly where the gap has been widest.
Europe’s innovation depth is real. The underfunding and valuation discount aren’t signs of weakness — they’re signals of mispriced potential. With more private growth capital and tighter startup–corporate linkages, Europe won’t just produce more startups than the US — it will keep and scale more of them here. That’s the opportunity.
