The role of public and private capital in financing Europe’s growing companies

There’s a lot of capital out there, a lot of capital looking for full investments, partly because of the historically low interest rates. If an entrepreneur in Europe needed 25 to 40 million dollars, that pool of capital did not exist here. There are certain areas where Europe is still missing in terms of the number of funds or capital sources for companies, especially if they really want to scale and get larger financing rounds and deeper pockets, like a big 300–500 million dollar fund or more.

There are already a lot of good things happening. For example, the European Investment Fund is broadly supporting many European funds to kickstart either new funds or existing funds with an anchor investor, which has been a tremendous boon for the ecosystem here. But they don’t provide all the money, so it’s always matched with private money, which is a very smart way to make sure there is more liquidity coming into investment funds.

What the government can do to help enable this is to think a little about how to foster the ecosystem for large pensions, like German pensions or British pensions. Private capital coming more into these markets will drive more innovation and higher levels of performance. You can see day after day examples of success stories with great entrepreneurs founding companies that increase in value and get to a point where they get sold or, even better, go public. The returns that we’re seeing over the past five years have grown very strongly. I think there’s a need for these types of funds that are now being created throughout Europe: a little larger, with more capital, and able to deploy in those types of companies.