Dublin, 13 October 2025 — A new report by European Women in VC, Pensions for Purpose, and Venture Connections highlights a stark imbalance in global capital flows: while U.S. pension funds routinely commit close to 10% of their portfolios to private equity, including venture capital, European funds invest a fraction of that — just 0.12%.
This gap persists despite European pension funds collectively managing more than €3 trillion ($3.4 trillion) in assets. Advocates argue that even a modest reallocation could transform both the continent’s venture ecosystem and the long-term performance of pension portfolios.
A Call for Structural Change
Kinga Stanislawska, founder of European Women in VC and general partner at Experior VC, described the shortfall as a systemic weakness:
“There’s a chronic lack in Europe of the types of LPs that you see in the U.S. Putting 1–2% of pension money to work for venture would be transformational for Europe and the pension funds themselves.”
Her comments underscore a growing frustration among European venture capitalists, who often rely on family offices, sovereign wealth funds, or U.S. institutional investors to fill funding gaps.
Implications for Innovation
- Startups underfunded: Limited domestic capital leaves European founders more dependent on foreign investors, often leading to talent and intellectual property migrating abroad.
- Returns foregone: Pension funds miss out on the outsized gains that venture capital can deliver, particularly in sectors like AI, biotech, and clean energy.
- Strategic vulnerability: Europe risks falling behind in scaling homegrown companies to global leaders, reinforcing its reliance on U.S. and Asian capital.
The Way Forward
The report calls for policy incentives, regulatory clarity, and education for pension trustees to encourage greater allocations to venture. Advocates argue that even a shift to 1–2% of pension assets would unlock tens of billions of euros for European startups, while diversifying pension portfolios and enhancing long-term returns.
Summary: Europe’s pension funds remain heavily underexposed to venture capital compared with their U.S. counterparts. With trillions under management, even a small reallocation could reshape the continent’s innovation landscape and strengthen retirement systems — but it will require structural reform and a shift in institutional mindset.
Sources: PitchBook; European Women in VC; Pensions for Purpose; Venture Connections.
