Innovation & technological leadership

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Built by innovation capital

Across Europe, innovation is everywhere - in the technologies that power our devices, the therapies we rely on, and the infrastructure that underpins our economies. Less visible is the force that enabled these breakthroughs: innovation capital.

Innovation capital seeks out bold, disruptive ideas that can lead to entirely new paradigms. These are the outcomes innovation capital helped build, across the sectors it backed and the technologies it funded.

Vaccines engineered by your body

From COVID’s emergence to the deployment of mRNA vaccines in under 18 months, decades of research translated into real-world resilience. Scientific breakthroughs originating in European laboratories, fuelled by innovation capital, showed how the body can be instructed to produce protective immunity.

User-centric markets

European regulatory change opened banking and energy markets to new entrants. Innovation capital scaled these challengers, embedding competition, transparency and resilience into systems that benefited citizens, households and businesses across Europe.

Chip technology revolution

EUV lithography became the foundation of advanced semiconductors, enabling AI and next-generation computing. Sustained private and corporate investment transformed frontier science originating in Europe into an industrial capability that remains a European strategic asset.

Tech connecting people

From GSM standards to digital platforms and software, European businesses helped shape how billions communicate, listen to music and use marketplaces. Private markets scaled these innovations into efficient, globally deployed digital solutions.

Progress beyond imagination

European advances in gene editing, protein engineering, quantum computing and advanced materials have redefined scientific and industrial horizons. Innovation capital accelerated discovery and is helping to secure upcoming industrial system shifts in Europe.

Energy with a future

Renewables, storage and grid technologies reshaped energy systems across Europe. Innovation capital enabled these technologies to move from pilots to infrastructure, strengthening long-term energy security and competitiveness.

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The systemic friction holding us back

Each of these outcomes progressed through the same cycle: innovation, validation and industrial scaling. At every stage, innovation capital powered the transition.

Yet innovation capital's role is rarely recognised as a prerequisite. Across the sectors we invest in, we observe the same pattern: innovation capital is acknowledged after success, once the outcome is visible. Innovation capital is treated as a footnote to the story rather than the condition that made it possible.

That is the friction. Because innovation capital is not seen as pivotal to the story, it does not get the backing it deserves. The innovation flywheel is underpowered. And Europe pays the price.

Ranking the blockers

Where the discussion started

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Necessary shifts: how GPs see it

"We do not talk to our stakeholders enough. We do not understand each other.”

That realisation shaped our discussion at Ugly Duck. When we examined innovation capital through the lens of limited partners, regulators and policymakers, a consistent gap emerged in how the asset class is understood by those whose decisions shape whether capital flows or stalls. The shifts we propose start there.

Make it visible

“If you see a misconception, take the data and show it. Make it impossible to argue with.”

The data exists. The case studies exist. What is missing is coherent, consistent reporting that makes the full picture visible: the financial returns, the societal outcomes and the economic contribution that innovation capital generates simultaneously. We need to show up differently. More data. And narratives that connect what we build to the people and institutions whose understanding of it shapes what is possible.

"If European VC were a portfolio company, we would run a serious communications campaign so people finally see the full picture."

Align the system

Even where innovation capital is recognised as valuable, capital allocation decisions are made in isolation. Policymakers, regulators, LPs and GPs respond to different incentives, time horizons and accountability frameworks. As a result, capital that could support innovation is delayed, constrained or redirected.

"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."

Our take is that the necessary shifts are not about relaxing investment or regulation standards. They are about enabling capital to move with purpose and treating innovation capital as a shared system rather than a series of isolated allocation decisions. Specifically:

aligning the role of public and private capital across the stack
reducing the unintended frictions that slow innovation without improving outcomes
building confidence that innovation capital is a strategic allocation which delivers returns consistently by design, within a functioning ecosystem

Open the door

For many LPs, innovation capital remains difficult to navigate. Fragmentation and inconsistent language obscure performance outcomes, increasing the cost of engagement and constraining private sector investment.

"LPs are overwhelmed. They tell us they don't know who to back."

This is a problem we can help solve through better data, simpler access structures and more consistent language. What the discussions pointed to clearly:

transparent market-level data and benchmarks that show clearly how innovation capital can contribute to pension outcomes
fair and transparent fee structures that reflect the value created
simpler, more accessible fund-of-funds structures that lower barriers to first entry

"If pension funds invest in VC, pension systems will be resilient and sustainable."

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What becomes possible if the shifts hold

If the evidence is made visible, the system aligns behind it and the door opens to a broader base of capital, here is what we believe becomes possible.

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