Europe’s Second Wind: Why We’re More Bullish Than Ever
SuperReturn Berlin, perhaps the world’s largest private capital conference, speaks volumes to the global relevance and maturity of the European asset class. General Partners Eric Fitzgerald and Jessica Archibald attended this year’s event, and the message was clear: European venture capital is getting a second wind.
Over the past decade, the European venture capital market has transformed from once fragmented and often overlooked into a meaningful pillar of the global startup ecosystem. Today it represents 15–20% of global venture dollars, up from roughly 13% in 2014. (1) This trajectory was built through patience, conviction, and pattern recognition.
Top Tier’s exposure to European venture capital dates back to 2005, a time when the market was still recovering from the dotcom bust, valuations were modest, and the ecosystem was just putting down roots. For nearly two decades, our team at Top Tier watched, waited, and selectively built.
European venture capital remained less developed until 2017, the record-breaking investment year. Top Tier’s team recalls, “We were watching the growth in real time. For us, there’d always been an interest in European markets – we knew there was potential.” Our dedication would soon be rewarded. 2017 marked a new age of European venture capital. Household names seemed to arise overnight: Spotify, Klarna, Adyen, Deliveroo, and Wise crossed the $10B threshold, validating what many had long suspected – Europe could produce world-class companies capable of competing on a global stage. (2)
Then came a reset. Post-2022, rising interest rates and a global risk-off environment cooled what had been an overheated market. European venture capital deal volumes dropped, but many top-performing investors chose to stay put. They doubled down on selectivity, concentrating capital in companies with clearer paths to profitability and durable fundamentals. 2025’s year-end capital was just over €66 billion, up 5.1% from 2024. (3) It seems that even having absorbed significant macro turbulence, the market has been able to emerge with greater discipline and higher quality.
Like the 2017 boom, some big names are currently on the horizon. What sets this wave apart from the previous is the technology at its center. European AI startups collectively raised a record $21.6 billion in 2025, and the companies leading the charge are built differently than their predecessors. [4] As Eric puts it: “Companies like ElevenLabs, Lovable, and Synthesia aren’t waiting to expand internationally anymore. They’re selling into the United States from day one.” Europe is becoming a launchpad for world-class technical talent, lower cost structures, and founders building globally from the outset rather than regionally first.
Beyond AI, Europe’s investment thesis is anchored in industries that benefit from the continent’s structural advantages: climate technology, defense technology, advanced manufacturing, and healthcare. These are capital-intensive, technically complex sectors supported by world-class academic institutions and meaningful government backing – a fundamentally different profile than the consumer-driven ecosystems that define much of Silicon Valley.
The valuation dynamic reinforces the opportunity. Our team notes, “Investing in European markets gives you the upper hand of lower valuation with better ownership than you’ll find in Silicon Valley, while still exiting at US levels.” The valuation gap between Europe and the U.S. has widened, a dynamic that continues to shape how sophisticated investors think about entry points and return potential.
One structural shift that Top Tier believes has been quietly decisive: “Historically, Europe didn’t have strong enough EU syndicates. Companies started at the Seed and Series A stage and would immediately go to the U.S. to continue their growth trajectory. The market evolved over time. Today, European entrepreneurs want local partners. The EU syndicates are deep enough that they generally only require one U.S. VC should they want to expand across the pond.” That bridge between European origin and American scale is now well-traveled.
Top Tier has been building relationships in the European market for twenty years. Our team has seen the false starts, the breakthroughs, and the compounding of both. Today’s European venture market stands in stark contrast to its 2005 footprint, and even its 2017 version appears as a shadow of what it’s becoming. Europe has evolved into a high-quality, globally relevant venture ecosystem with the potential to generate outsized returns for those with the patience and perspective to navigate it.
We’ll be keeping a finger on the pulse. Will you?
Citations
[1] “10 Years That Changed European VC…” 1 Aug. 2025, EU – Startups
10 years that changed European VC: trends, sectors, and the road ahead | EU-Startups
[2] “Europe’s Most Valuable Fintech…” 18 May, 2026, TechBloat
[3] “ VC in Europe in 2025…” 21 Jan. 2026, Startup Business
VC in Europe in 2025, €66.2 billion, up 5.1%
[4] “Nvidia-Backed AI Voice Startup ElevenLabs…” 4 Feb. 2026, CNBC
Nvidia-backed AI voice startups ElevenLabs hits $11 billion valuation
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