Technological risk is not the same as capital at risk.
Across Europe, innovation is everywhere — in the therapies we rely on, the technology that powers our devices, the platforms we use daily and the infrastructure that underpins our economies. What is far less visible is the force that enabled these breakthroughs to scale: private markets. The transformation of entire sectors did not happen by chance or through public research alone. It happened because venture capital, growth equity and private credit absorbed early technological risk, built industrial capacity, and financed the pathways from discovery to deployment. These are not incremental improvements; they are system-level shifts made possible when ambition, regulation and innovation capital align
A key perception shift is needed here. Technological risk is not the same as capital at risk. Early scientific and engineering uncertainty is a necessary, productive and value-creating part of innovation. It is the first step in turning research into real-world capability. Private markets do not absorb technological risk for its own sake, but because doing so unlocks the outcomes Europe needs: new industries, resilient supply chains, leadership in critical technologies and jobs that anchor prosperity across regions.
What follows are examples of what happens when innovation capital operates as it should — with VC funding early risk, growth equity building industrial scale, and private credit creating resilience and infrastructure.
mRNA Vaccines that reshaped therapeutic development worldwide
A revolution in life sciences. From COVID’s emergence in late 2019 to vaccine deployment within 18 months, this shattered timelines and redefined therapeutic development — enabled by decades of European research and patient private investment.
Open Regulation in Banking and Energy
Regulatory change (PSD2) opened Europe’s banking ecosystem, allowing challengers to redefine consumer finance and forcing incumbents to adapt or acquire. Similarly, deregulation in energy transformed consumption patterns and created space for new entrants, reshaping two critical sectors.
The common thread
Research seeds discovery — but innovation capital turns ideas into industries. VC, growth equity and private credit are collectively Europe’s engine for technological leadership. Their value is not in risk profiles or volatility, but in the real-world outcomes they deliver: industrial capability, resilient supply chains, strategic autonomy and technologies that matter.
Bridging the Perception Gaps: What We Heard, What It Means, and What Must Change
The structural blockers slowing Europe’s technological leadership are real, but many of them persist because of how innovation capital is perceived. The challenge extends beyond regulatory and financial considerations. It is also cognitive. The people who shape Europe’s innovation landscape often do not share a common understanding of what we do, the value we create, or the conditions we need to succeed.
Across the workshops, a clear theme surfaced repeatedly:
Policymakers, regulators, long term investors and we as GPs often move in parallel rather than in partnership. In that space between us, misconceptions take root. Some see innovation capital as volatile rather than strategic. Others see a fragmented market rather than a system that creates jobs, tax revenues and industrial capability. Many see risk but not the outcomes it delivers.
"We do not talk to each other enough. We do not understand each other."
"If we want people to value innovation, we have to show them what it delivers, not just talk about IRRs."
"In Europe, we create our own problem. Public money is so involved that regulators feel they must protect it, and that leads to more scrutiny."
Text to go here: It's not just a communications challenge, there's a deeper challenge.
The result is a cycle of hesitation:
- policymakers who underestimate the strategic value of innovation capital
- LPs who stay on the sidelines
- regulators who restrict rather than enable
- GPs who feel misunderstood
In short, Europe’s perception gaps translate directly into Europe’s fundraising gaps.
What Must Change: The solutions identified at Ugly Duck
THE PROBLEM
From misconception
Misconceptions thrive in the absence of evidence. "If you see a misconception, take the data and show it. Make it impossible to argue with."
THE SOLUTION
to understanding
We discussed the value of regular market reports, case studies linked to real outcomes, and clear national narratives that show how innovation capital contributes to jobs, tax revenues and competitiveness. One GP captured the opportunity with a memorable analogy:
"If European VC were a portfolio company, we would run a serious communications campaign so people finally saw the full picture."
THE PROBLEM
From parallel tracks
Many of us noted that stakeholders operate in silos. This is not surprising in a young ecosystem, but it limits our potential.
"This market is still early compared to the US. It is about educating the market and showing why it matters."
THE SOLUTION
to a shared purpose
There is need for stronger, more structured dialogue:
- local and national VC associations advocating consistently
- regular engagement with policymakers, not just during crises
- shared narratives linking innovation capital to national priorities