current
Growth Funding Gap
Despite overall growth, a significant funding gap exists for European growth-stage companies, hindering their ability to scale.
Timeframe
near-term
Categories
Impact areas
Detailed Analysis
A key challenge identified in the report is the growth funding gap. "Over the past decade, Europe underfunded its growth companies to the tune of $375 billion which still doesn’t come close to the trillions invested in the US." This gap is attributed to lower conversion rates to growth-stage rounds and a reliance on US investors for later-stage funding. This disparity in funding limits the ability of European companies to scale and compete globally, potentially forcing them to relocate to access necessary capital.
Context Signals
European tech startups are half as likely as US startups to raise a $15M+ round.
Pension funds and major insurers currently allocate just 0.01% of their $9 trillion capital pool into European venture capital.
US tech startups are twice as likely to raise a growth stage $15M+ round than European firms.
Edge
Innovative financing models, such as venture debt and revenue-based financing, could help bridge the gap.
Increased government support and incentives for growth-stage investment could attract more local and international capital.
The emergence of more specialized growth funds focused on specific sectors or technologies could provide tailored support for scaleups.
