Benedict Evans’ recent reflections on 14 years in VC resonate sharply in Europe where the industry faces a reckoning. European startups raised €45B in 2023 down 50% from 2022 while US peers pulled in $200B. Local VCs like Balderton and Atomico note that European scaleups still trail US counterparts in revenue growth with only 15 European unicorns minted in 2023 versus 50+ in the US. The continent’s fragmented markets and risk-averse LPs compound the problem.

Europe’s VC model is broken not by lack of ideas but by structural inertia. The region’s strength in deep tech AI and climate is undermined by late-stage capital flight to the US where IPOs and M&A exits are richer. European pension funds allocate just 2% to VC versus 10%+ in the US. Without local capital depth Europe’s best startups like Mistral AI or Celonis will keep flirting with US listings or acquisitions.

US VCs and big tech win as they cherry-pick European talent and IP. European founders lose as they dilute more for less capital. Local LPs lose as returns lag. The winners are the few pan-European funds like EQT Ventures or Northzone that can bridge the gap.

Watch for a surge in European secondary transactions as founders and early investors seek liquidity. Expect more dual listings in Amsterdam and NASDAQ. Policy moves like the EU’s proposed €20B STEP fund could shift the balance but execution is slow.