European investors gathered in Tallinn in May and concluded that while the continent boasts a robust pipeline of tech firms, the capital needed to scale them is largely missing at home.
Meeting highlights reveal a funding shortfall
The invitation‑only LP‑GP Meetup, held during the Latitude59 conference, brought together limited partners, fund‑of‑funds managers and venture firms such as Mubadala, the Cambridge University Endowment Fund, Itochu Corporation, Isomer Capital, Equation, Plural, Aspire11, Karma Ventures and Siena Secondary Fund. Organisers from the Estonian Private Equity and Venture Capital Association said the event was meant to create a high‑quality, targeted platform for meaningful discussions.
Participants described Europe as having a deep bench of companies capable of competing globally, yet the funding base still leans heavily on the United States. Public money works well, but private capital in the Nordic‑Baltic region depends on attracting investors willing to commit to European‑based funds.
Taavet Hinrikus, co‑founder of Wise and now a partner at Plural, told the audience that the strongest growth potential lies in deep‑tech, hardware, robotics and defense. He cited the evolution of Wise as proof that regulated, technically demanding businesses can now attract financing, a shift from the early days when “nobody wanted to invest in regulated industries because they were considered too complicated.”
Related: Bridging ambition and hard truths
Data shows a clear gap with the United States
Venture investment across Europe reached €66.2 billion in 2025, roughly 22 percent of the U.S. total, according to a February column by a Harvard Business School professor. The same year, Atomico’s State of European Tech report found that almost half of the late‑stage funding for European start‑ups came from U.S. and Asian investors.
The gap is evident.
Hinrikus linked part of the disparity to risk attitudes. “If you fail in Europe, everyone writes you off and nobody wants to work with you again, which is the opposite of the US,” he said, noting that institutional decision‑makers often face limited upside and severe consequences for a wrong bet.
A panel on fund‑of‑funds strategy brought together Chris Wade of Isomer Capital, Mark Schmitz of Equation, and Pavel Mucha of Aspire11.
Related: England Property Flats And Houses On The Market Or To Rent In England
Across the discussion, a practical theme emerged: European investors need to disclose liquidity terms early, benchmark performance against U.S. peers, and allow longer diligence cycles when courting institutional capital.
One way to understand the stakes is to consider how investor geography can affect vendor decisions in cybersecurity and legal‑tech markets. When a European firm raises money from U.S. investors, board composition, corporate structure and data‑residency choices may shift, influencing procurement and risk assessments for buyers. Conversely, firms that remain funded by European capital often keep stricter data boundaries, which can be a decisive factor for organizations with sovereign‑data requirements.
In the broader picture, the scarcity of home‑grown capital could slow the commercialization of deep‑tech innovations that are critical for Europe’s strategic autonomy. Without sufficient private funding, promising projects in robotics, defense and advanced hardware may rely on foreign investors, potentially steering outcomes toward external priorities rather than regional needs.
For now, the takeaway for professionals monitoring the European tech environment is clear: the source of a vendor’s financing matters, and the ongoing capital gap may shape the next wave of security‑adjacent solutions.