Don't Mistake Activity for Abundance: Europe Still Has a Capital Problem — 0100 Weekly Brief
Hello there,
For years, the most common criticism of Europe’s private markets ecosystem was straightforward: there simply wasn’t enough capital. Today, some argue the problem has shifted — that Europe now has the capital, but struggles to allocate it effectively.
That reframe is convenient. It’s also incomplete.
Yes, institutional investors remain active. Private wealth is entering private markets. Policymakers are pushing capital toward strategic sectors. But the structural gap between what Europe’s innovation economy needs and what it actually receives hasn’t disappeared — it has evolved. Capital is still too scarce at critical stages, too concentrated in a handful of markets, and too slow to reach the sectors and regions where it would matter most.
The conversation at 0100 Europe in Amsterdam reflected this tension. Allocation discipline matters — but you cannot allocate your way out of a formation problem. Here’s what the stage had to say.
LPs Are Becoming More Selective
One of the most interesting discussions focused on how institutional investors are responding to ongoing market uncertainty.
Contrary to expectations, most LPs are not changing their private market allocations. Instead, they are becoming selective about where they place capital.
Several participants noted that geopolitical uncertainty, AI disruption, and slower liquidity cycles are forcing investors to spend more time evaluating manager quality rather than simply maintaining broad exposure.
The question is no longer whether investors want venture capital or private equity exposure.
The question is which managers can consistently navigate uncertainty.
A recurring theme was that the current environment is accelerating portfolio concentration. Many LPs expect to maintain fewer GP relationships while growing conviction behind their strongest managers.
Liquidity remains the biggest challenge.
Several investors highlighted that distributions remain significantly below historical norms, creating pressure across private market portfolios. Capital continues to be deployed, but money is not returning to LPs at the same pace, forcing investors to rethink portfolio construction and commitment pacing.
For private equity investors, this suggests that manager selection may become an even larger source of alpha than market timing over the coming years.
Capital Formation Is Evolving Beyond the Traditional Fund Model
One of the clearest trends discussed throughout the conference was the changing relationship between LPs and GPs. Traditional blind-pool investing remains important, but investors want greater flexibility, transparency, and direct exposure.
Co-investments emerged as one of the strongest themes. Many LPs now view co-investment rights as a core component of manager relationships rather than an optional benefit. Investors see co-investments as a way to reduce fee drag, improve portfolio construction, and gain deeper exposure to their highest-conviction opportunities.
At the same time, secondaries continue to evolve from a niche liquidity tool into a strategic portfolio management instrument. Panelists noted that both LP-led and GP-led secondary transactions are becoming increasingly sophisticated, allowing investors to actively reshape portfolios rather than simply solve liquidity problems.
For private equity firms, this trend suggests that capital formation is becoming more customized, with investors demanding more flexibility than traditional fund structures historically offered.
Emerging Managers Continue to Punch Above Their Weight
A particularly interesting discussion explored the ongoing debate between emerging managers and established firms.
Several allocators argued that fund size alone is a poor predictor of performance. Instead, they focus on factors such as specialization, alignment, expertise, and ownership discipline. Many investors continue to favor smaller and emerging managers because they often demonstrate:
stronger focus,
higher conviction,
greater ownership concentration,
and stronger alignment with LPs.
One recurring lesson was that many first-time managers successfully access opportunities but fail to secure sufficient ownership stakes in their portfolio companies.
As a result, some allocators believe second and third funds often outperform first funds because managers have learned how to translate access into meaningful equity positions. While fundraising remains challenging, appetite for high-quality emerging managers appears intact.
The distinction is no longer emerging versus established. It is differentiated from undifferentiated.
Strategic Autonomy Is Becoming an Investment Theme
One of the most forward-looking conversations focused on Europe’s growing emphasis on strategic autonomy.
Participants argued that Europe is entering a period in which industrial, technological, and capital markets policies are becoming interconnected.
The discussion highlighted growing momentum behind sectors such as:
defense,
energy infrastructure,
digital sovereignty,
advanced manufacturing,
and strategic technologies.
Several speakers also emphasized that Europe already possesses substantial pools of capital. The challenge is creating incentives that direct more of that capital toward productive risk-taking and long-term innovation. There was broad agreement that policy is becoming a more important driver of investment outcomes.
The open question is whether Europe can move quickly enough, and cohesively enough, to translate political ambition into globally competitive industries. For private market investors, strategic autonomy is no longer simply a policy discussion. It is becoming an investment framework.
Private Wealth Is Becoming the Next Growth Engine for Private Markets
Another important theme was the growing role of private wealth investors.
As institutional allocations mature, many participants believe the next phase of private market growth will come from family offices, private banks, and individual investors. However, this change also creates new demands.
Private wealth investors expect:
flexible liquidity options,
access to secondaries,
evergreen structures,
and more sophisticated portfolio management tools.
Private assets remain fundamentally illiquid. Liquidity solutions can help, but they do not eliminate the underlying characteristics of the asset class.
As private wealth becomes a larger source of capital, liquidity management is likely to become one of the defining competitive advantages for fund managers.
Let’s Continue the Conversation at 0100 Emerging Europe
How should LPs allocate capita
l in a market with fewer distributions?
Where are the most attractive opportunities emerging across Europe?
Which managers are best positioned to capture the next decade of growth?
How will strategic priorities such as defense, energy, digital sovereignty, and industrial resilience reshape investment decisions?
These themes will continue at 0100 Emerging Europe 2026 in Budapest (23–24 September), where private equity, venture capital, private wealth, and institutional investors will gather to explore how capital is moving across the broader Central and Eastern European region.
The agenda includes discussions on allocation trends, the scale-up funding gap, strategic autonomy, secondaries and liquidity solutions, defense and dual-use innovation, and what LPs are looking for in managers today.
We look forward to continuing the discussion in Budapest.
Celebrating One Year of The Weekly Brief
Before we wrap up, we wanted to take a moment to say thank you. This edition marks one year of the 0100 Weekly Brief.
Over the past 12 months, we’ve had the privilege of landing in your inbox each week, sharing insights from investors, fund managers, founders, and industry leaders across private equity, venture capital, private wealth, and private markets more broadly.
What started as an experiment has grown into a community of readers who are curious about where capital is moving, how markets are evolving, and which trends are shaping the future of investing.
We’re incredibly grateful that you’ve chosen to spend a few minutes with us each week.
As we look ahead to the next year, we’d love to hear from you. If there are topics you’d like us to cover, guests you’d like us to interview, questions you’d like us to explore, or feedback you’d like to share, simply reply to this email.
Some of our best ideas have come directly from conversations with readers.
Thank you for reading and for spending part of your week with us! We look forward to continuing the conversation.
Patricia & Laura