Unlocking Europe’s growth potential: the role of private equity, venture capital and investors

Europe stands at a turning point. With an increasingly volatile global landscape and a growing desire for economic sovereignty, we now have a real opportunity to strengthen Europe’s position as a global growth hub — a true epicenter of innovation, job creation, and sustainable value.

Private equity (PE) and venture capital (VC) will play a critical role in ensuring Europe is a global hub for growth. Across the continent, these asset classes have consistently demonstrated their ability to scale businesses, create quality jobs, and accelerate innovation. The latest data from Invest Europe’s Private Equity at Work report confirms this once again: in 2023 alone, PE and VC-backed companies created 339,149 new jobs, a 5% increase, outpacing Europe’s overall job growth rate for the sixth consecutive year. This consistent outperformance is a clear signal of the industry's positive contribution to Europe's economy.

But we must go further — and faster.

To unlock the full potential of European businesses, we must ensure that they can scale from within Europe. That means creating a fertile environment for capital deployment, talent attraction, and long-term support. It’s not just about startups; it’s about enabling companies at every stage of the lifecycle to grow, hire, and compete globally — all from a European base. Today, private equity and venture capital-backed companies already employ 11.2 million people across Europe, or 5% of the continent’s entire workforce, demonstrating the sector’s importance as a pillar of sustainable economic growth.

At the core of this transformation are the long-term investors: pension funds, insurance companies, foundations, and corporate investors. These LPs hold the largest pools of capital in Europe, yet their engagement in private markets still lags behind their peers globally. Regulatory frameworks such as CRR, Solvency II, and IORP II remain hurdles, often unintentionally discouraging allocations to PE and VC. We need to rethink how we can better align regulation with long-term strategic goals — not just to protect, but to enable growth in Europe.

One powerful solution lies in activating European private wealth. We should look beyond institutional capital and create mechanisms that allow successful founders — those who have already built Europe’s standout startups — to reinvest in the next generation of entrepreneurs. Their expertise, networks, and long-term vision are as valuable as their capital. Let’s bring them in.

Europe’s strength lies in its diversity. That’s why we should empower each member state to activate capital in ways that build on their unique strengths. Regional innovation ecosystems, backed by local LPs and connected across borders, can create a resilient and competitive Europe. The Private Equity at Work findings show this vividly, with strong double-digit job creation in regions from Southern Transdanubia in Hungary (+27%) to Pohjois-Savo in Finland (+21%), and the Akershus region around Oslo (+37%), underscoring the dynamism of local ecosystems.

In this effort, state-owned investment companies — such as Tesi, EIFO, and Bpifrance — can act as catalysts and risk-sharing partners for private capital, enabling us to achieve even more together. Their participation can help de-risk investments and crowd in private sector funding, multiplying the impact across the continent.

This is where limited partners play a decisive role. Their investment choices shape markets. By backing funds that focus on sustainable growth and job creation, LPs can amplify the positive impact of private equity and venture capital — and help deliver a more prosperous, autonomous Europe.

The talent is here. The capital exists. The time to act is now.

Pia Santavirta
CEO
Tesi (Finnish Industry Investment)