The European Investment Fund is launching a €15 billion fund of funds named ETCI 2, aiming to unlock up to €80 billion in scaleup funding across Europe. Germany’s WIN initiative is targeting €12 billion by 2030, while France’s Tibi programme has pledged €7 billion in private capital and identified 92 VC and growth funds with €22 billion in assets. The European Commission’s Scaleup Europe Fund is deploying €5 billion, with a fund manager likely to be chosen this month. Coupled with the European Innovation Council’s €10 billion budget until 2027, the total public and publicly mobilised capital flowing into European venture and growth investing exceeds any previous efforts.
The question is whether these funds will address the intended problems or create new ones.
The gap prompting the spending
European venture capital investment hit €66.2 billion in 2025, about 22% of the U.S. total. The disparity is most pronounced at later stages: EU growth funding is around 10% of US volumes. Europe produces more tech startups than the US but has 80% fewer scaleups and 85% fewer unicorns. The structural issue is clear: European pension and insurance funds make up only 7% of VC investments, compared to about 20% in the US, and sovereign wealth funds are involved in less than 1% of European VC fundraising. The continent generates companies but struggles to finance them when they need hundreds of millions to compete globally.
The EIF already supports around 25% of all venture capital in Europe and backs nearly half of all VC-backed startups annually. ETCI 1, its first fund of funds, raised €3.9 billion from countries including Spain, Germany, France, Italy, Belgium, and the EIB Group, backing 14 funds with over €1 billion each. The portfolio includes 11 unicorns, including DeepL, TravelPerk, and Framer. ETCI 2 is set to operate on a larger scale, supporting about 100 funds from €300 million mid-size vehicles to over €1 billion mega funds, with the ability to invest up to €200 million per company, over three times ETCI 1’s €60 million limit.
Where the money is going
The Scaleup Europe Fund, distinct from the ETCI programme, aims to channel capital into strategic technologies. Focus areas include AI, quantum computing, semiconductors, robotics, autonomous systems, energy, space, biotech, and advanced materials. In March, Bloomberg reported that EQT, Northzone, Eurazeo, Atomico, and Vitruvian Partners were shortlisted as fund managers. The fund combines €1 billion from the European Innovation Council with €4 billion from private investors and is expected to start operations in the year’s second quarter.
Germany’s WIN initiative, launched in September 2024 with KfW Group and the Federal Ministry of Finance, is approaching things differently. It seeks to adjust the regulatory environment to unlock institutional capital by raising the pension fund VC quota from 35% to 40%, introducing a 5% infrastructure quota, and relaxing pension fund coverage requirements. Institutional investors involved include Deutsche Bank, Allianz, and Deutsche Telekom. France’s Tibi programme, now in its second phase, has taken a similar road, encouraging 35 institutional investors to commit €7 billion and labelling funds across late-stage, publicly traded tech, and early-stage segments.
The result is that Europe is rewriting its financial rulebook to allocate capital into technology at a rate deemed politically unthinkable five years ago.
Growth problems money cannot solve
Europe’s scaleup deficit is not mainly a capital issue; it is structural. Structures have not evolved as quickly as the funding commitments.
Sixty-two percent of European startups cite talent acquisition as their top scaling challenge. The fragmented single market means that expanding from one European country to another often requires navigating distinct regulatory, tax, and employment frameworks that add costs and complexity without providing the market scale that American companies access by default. The EIC’s portfolio highlights this tension: it has backed 740 deep tech companies with a portfolio value of nearly €70 billion, with over three private euros following each public euro invested. Yet, only six companies are valued over €500 million, and the conversion from funded startup to globally competitive scaleup remains low.
Profitability is another challenge. Only two of Europe’s ten most valuable startups are confirmed profitable. Of the continent’s 66 fintech unicorns, just 13 are profitable. Revolut stands out with €2