Hello there,
Europe’s scaleup debate just became much more concrete.
The European Innovation Council has selected EQT to lead the new €5 billion Scaleup Europe Fund, a major EU-backed initiative designed to provide growth capital to Europe’s most promising deep tech companies.
The level of interest alone signals how strategically important Europe’s growth-stage market has become. The previous list included firms like Atomico, Eurazeo, and Vitruvian among the contenders.
The fund will target sectors including AI, quantum, dual-use technologies, clean energy, space, biotech, and medical innovation, with the goal of helping European scaleups stay and grow in Europe rather than raise late-stage capital elsewhere.
On paper, this is exactly the kind of initiative Europe has been waiting for.
For years, Europe has been very good at creating startups, but much slower at turning them into large global companies. The problem has not been a lack of ideas, founders, or technical talent. The harder issue has been what happens after the early stages, when companies need much larger rounds, patient investors, experienced operators, and the confidence to keep building from Europe.
That conversation also extends beyond policy into the realities of growth-stage investing itself. And for this, we met with Frederic Huynen and Danai Musandu from HPE Growth, to discuss:
How do we help companies scale efficiently, build long-term value, and evolve into global market leaders?
They explained that Europe is not struggling to create good startups; the bigger challenge is helping those companies grow into global leaders.
Building the next generation of European tech champions requires more than funding alone; it also needs stronger support systems, better growth opportunities, and a long-term approach that helps companies move from early success to international scale.
The Missing Middle Piece of Capital
The Scaleup Europe Fund comes at a good time: to bring public capital, institutional investors, and a private market fund manager into a single structure around one clear goal: closing Europe’s late-stage financing gap.
The timing is important.
According to the freshly published Invest Europe’s 2025 activity data, European private equity and venture capital had one of its strongest years on record. Private equity fundraising reached €147 billion in 2025, making it the second-largest fundraising year on record.
The UK and Ireland remained the largest fundraising region with €69 billion raised, followed by France and Benelux at €38.7 billion. The overall picture looks healthy and suggests investors continue to see Europe as an attractive market.
But large fundraising numbers do not automatically translate into scale-up capital, and the underlying story is more complicated.
Most of the strength is still concentrated in the buyout. Buyout fundraising reached €103B in 2025, while venture fundraising fell to €17B, down 29% from 2024 and 16% below the previous five-year average. Growth fundraising reached €21B, representing only 14% of the total amount raised.
This is the core of Europe’s scaleup problem.
Early-stage investors help companies test ideas and find product-market fit. Buyout investors typically enter businesses with established operations and more predictable cash flows. Growth investors sit somewhere in the middle. Their role is helping companies move from being successful businesses into becoming large businesses.
Europe is becoming increasingly efficient at financing established businesses and acquisitions. But the segment sitting between early-stage companies and mature buyouts still looks relatively thin. Capital is coming into European private markets, but not enough is flowing into the segment of the market where young technology companies become global leaders.
Capital Continues To Flow At The Top
The structure of fundraising also indicates that large funds continue to attract a large share of capital. In 2025, only 28 funds larger than €1 billion represented roughly half of annual fundraising activity. At the same time, hundreds of smaller funds continued operating across Europe but captured a much smaller share of overall capital.
This does not necessarily create a problem on its own.
Large funds bring scale, resources, and operational capabilities. But concentration at the top can also shape where capital ultimately flows. Larger funds often seek larger, more mature opportunities. Companies still moving through growth stages may not always fit naturally into those strategies.
Recent market activity offers an interesting example. EQT, the same firm selected to manage Europe's new €5 billion Scaleup Europe Fund, recently submitted a £10.6 billion offer for Intertek, one of the UK's largest testing and certification businesses.
There is nothing unusual about the deal itself. Large private equity firms have always pursued established companies with stable cash flows and proven business models.
But it highlights an interesting contrast. Europe appears capable of mobilizing very large pools of capital for mature businesses. The harder question is whether similar levels of capital can consistently flow toward companies still in their growth phase.
That raises another question: who is actually funding growth?
Growth funds receive a large share of capital from funds of funds and asset managers, while government agencies also play a meaningful role. Pension funds, however, represent a relatively small share.
Buyout funds look very different. Pension funds and other institutional investors often provide the long-term capital that supports larger investment strategies. If growth investing depends more heavily on public institutions and intermediary capital, scaling the market becomes more difficult.
The issue may not be the amount of money available.
It may be who is providing it.
Who Owns Europe’s Growth Story?
The geographic sources of capital add another layer to the picture.
North America accounted for 22.4% of fundraising sources for Europe in 2025, up from 19.5% the year before. Global capital has always played an important role in European markets, and international participation is generally positive.
But ownership and financing structures can influence where value eventually accumulates.
If companies increasingly rely on foreign capital in later growth stages, questions naturally arise regarding headquarters, acquisitions, public listings, and long-term strategic decisions.
The Scaleup Europe Fund is trying to address part of this challenge
For years, Europe has focused on creating startups. Now the conversation increasingly centers on something else: building a deeper growth ecosystem to support companies through the next stage of development.
Europe may not need dramatically more ideas. It may need stronger growth capital, broader institutional participation, and more investors willing to stay involved as companies scale.
The next phase of Europe’s innovation story may depend less on creating companies and more on helping them become leaders.
🌍 Across the Ecosystem | News & Useful Resources for You
We’re not the only ones exploring the factors influencing Europe’s scaleup landscape. Across the ecosystem, everyone is examining the challenges behind Europe’s growth-stage funding gap and asking how capital can better support innovation at scale.
Here’s a spotlight on recent reports, articles, and perspectives covering Europe’s evolving startup ecosystem.
🗣️ Opinion | Europe’s challenge is not a lack of innovation, but the need to mobilise capital
The interview explains that the proposed EU Inc. framework aims to create a unified legal structure across Europe, simplifying cross-border business and improving conditions for founders and investors.
It also addresses Europe’s long-term competitiveness in technology and venture capital. The planned Scaleup Europe Fund is intended to support larger funding rounds and attract institutional investors, enabling successful European companies to remain and grow in Europe. The Commission additionally aims to connect innovation hubs such as Berlin, Paris, and Warsaw through the European Startup and Scaleup Hubs initiative.
🗞️ News | Citi strikes €15bn partnership with BlackRock for private European lending
The partnership aims to provide financing for companies and leveraged buyouts across Europe and eventually the Middle East. Traditional banks now collaborate with private credit firms to meet demand for large and flexible financing solutions. Because tighter regulations have reduced banks’ willingness to take on riskier loans directly, private investment groups have become a major source of capital, particularly for acquisitions and growth financing.
Private investment firms such as Apollo, Blackstone, KKR, and Ares have gained importance because they can finance transactions that traditional public markets or banks may avoid. However, the sector also faces growing scrutiny over risk exposure and loan quality, particularly in sectors such as technology and software, which are affected by AI-driven market changes.
Honestly I don’t love the decision. I would have preferred a pure play VC before EQT
EU created a €5B Scaleup Europe Fund and immediately handed it to a Swedish firm headquartered between two LP bases that don't actually overlap with European founders. couldn't be more European if it tried haha