Executive summary

The European VC ecosystem is undergoing a significant transformation following the tech reset, highlighted by evolving GP/LP (general partner/limited partner) dynamics, challenging fundraising environments, and strategic shifts towards sustainable investment practices.

The tech reset has widened the gap between VCs’ investment advocacy and LPs’ cautious stance, influenced by market revaluations and a loss of trust. This period has underscored the importance of prudent investment, profitability, and strategic adaptability, leading to efforts by VCs to rebuild trust with LPs through collaborative and adaptive strategies.

2023 witnessed a contraction in capital raised and the number of funds, with a notable shift towards larger, more stable funds. Despite these challenges, the outlook for 2024 is optimistic, with a focus on sustainable and differentiated investment strategies.

The average fund size has decreased, reflecting a cautious approach amidst market uncertainties. Conversely, larger funds have gained prominence, indicating a preference for scale and stability in uncertain times. LPs emphasise the need for VC funds to differentiate, align strategically, and operate transparently to attract investment. The geographic trends show a move towards cross-border investments.

For emerging VC managers, success hinges on effective networking, clear differentiation, consistent commitment, deep market knowledge, and adaptability in strategy and operations.

In essence, VCs in Europe are navigating a complex landscape of recalibrated strategies and shifting expectations. Despite facing challenges, there exists a pathway to resilience and growth for those who can navigate the intricacies of the post-tech reset environment with strategic foresight and adaptability.

Leading up to the tech reset, here is what Europe achieved:
92 to


€25bn to

Capital deployed

8,284 to

Company investments

From year 2017 – 2022

Core learnings from our LP episodes

The current market, marked by the tech reset, has prompted a reevaluation of strategies for raising venture capital funds. Engaging with Europe’s leading LPs has unveiled crucial insights into navigating the fundraising landscape effectively.

Here are the distilled learnings, but as always, the devil is in the detail so do go to Chapter 05 for the full insights and original LP episodes:

  • Embracing the tech reset as an opportunity
    The consensus among LPs is that, despite the challenges, the tech reset period offers a unique window of opportunity. Established relationships built on continued and proven strategies are more likely to see re-ups, while new relationships may take longer to build, emphasising that the period creates an opportunity for parties on both sides of the table to build solid foundations for future partnerships where there’s time for proper due diligence and trust-building.

  • Differentiation is key
    The necessity for venture capital firms to differentiate themselves has never been more critical. Emulating product development principles, VC funds must define their unique value proposition, target audience, and competitive edge. Authentic differentiation, rather than merely adding to the number of existing funds, attracts LP interest and investment.

  • Strategic navigation of cornerstone LP engagements
    Aligning with market norms and maintaining broad appeal are paramount. Flexibility in negotiations is important, but adhering to established industry standards ensures a smoother fundraising process. Focus on creating alignment with LPs, emphasising long-term relationships over short-term gains.

  • Transparency and governance
    Implementing governance structures that reinforce the fund’s autonomy and ensuring operational transparency are crucial in solidifying investor confidence. This is especially significant for VC funds emerging from family offices, where demonstrating independence from the family office is essential.

  • Dealing with bad LP behaviour
    Strategies to mitigate challenging LP behaviour include conducting due diligence on LPs, sharing experiences with fellow GPs, and being direct and transparent in communications. Understanding the investment process, recognising the decision-makers, and managing time efficiently are key to a successful fundraise.

  • Performance demonstration for emerging managers
    Evaluating emerging managers presents its own set of challenges, particularly when there is little to no track record to rely on. LPs look for consistency, the ability to build a strong network within the investment community, and evidence of strategic focus and execution.

Key advice for emerging managers raising capital across Europe

Drawing from pod episodes with 300+ VCs and LPs asking their key advice to emerging managers fundraising across Europe, our research has distilled pivotal advice for these managers, aimed at enhancing their fundraising efforts and establishing a robust foundation for success.

  • Networking and relationships
    The cornerstone of successful venture capital endeavours lies in the art of networking and fostering relationships. Mentioned by 28.6% of our guests, the emphasis on building trust-based connections stands out as paramount. Industry leaders advocate for a strategic, authentic approach to networking, stressing the importance of deep, sector-specific insights combined with broad, meaningful networks. This dual focus is vital for emerging VCs to attract quality investments and navigate the competitive landscape effectively.

  • Differentiation and unique value proposition (UVP)
    The ability to stand out through differentiation and a unique value proposition was mentioned by 19.7%, highlighting its importance in the crowded venture capital space. Successful differentiation encompasses both tangible elements like investment thesis and intangible aspects such as team expertise and narrative. A compelling narrative that aligns with potential investors’ goals is crucial for funds to carve out their niche and attract investment.

  • Consistency and commitment
    The advice to stay consistent and committed, enduring the many trials of fundraising was mentioned in 18.9% of the episodes, underscoring the essence of resilience, grit and continuous improvement in venture. Success hinges on the perseverance to push through setbacks and the dedication to one’s goals, emphasising the long-term nature of venture capital investment and the fact that is not just founders who need to be resilient in today’s market.

  • Knowledge and expertise
    With 14.3% of the mentions, the significance of deep knowledge and expertise cannot be overstated. Emerging managers are encouraged to build and demonstrate a profound understanding of their investment space, blending in-depth knowledge with effective communication and forward-thinking. This blend is essential for success, enabling managers to articulate their vision and strategy compellingly.

  • Transparency and honesty
    Emphasising transparency and honesty, this theme (10.9% of the mentions) advocates for authentic engagement and integrity in venture capital. Forming genuine investor relationships and being transparent about strengths, weaknesses, and learnings fosters trust and differentiates managers in a competitive field.

  • Adaptability and flexibility
    The advice on adaptability and flexibility (7.6% of the mentions) highlights the critical importance of agility in the venture capital and entrepreneurial sectors. Success in this dynamic environment requires the ability to pivot strategies, embrace continuous learning, and remain open to change, underscoring the value of a flexible mindset in navigating uncertainties and seizing new opportunities.

The key advice to emerging managers embarks on a comprehensive framework centred around building robust relationships, differentiating through a unique value proposition, demonstrating resilience and dedication, leveraging deep knowledge and expertise, maintaining transparency and honesty, and embracing adaptability and flexibility. These pillars not only guide emerging managers in their fundraising endeavours but also lay the groundwork for sustained success in the evolving European venture capital landscape.

Up Next

Chapter 01
GP/LP dynamics