New research shows that European venture capital delivers results on par with the US—but through a different playbook. For founders, investors, and policymakers, those differences shape who gets funded, how startups are valued, and how companies scale across Europe or the US. Those findings highlight what founders have to be aware of when pitching on either side of the Atlantic.
The US venture capital model, established in 1946 and adopted in Europe during the 1970s, underpins both ecosystems. The US leads in maturity and investment scale, and important differences persist, yet cross-regional comparisons remain limited.
A new study by European academics* addresses this gap by examining how institutional contexts shape venture capital decisions in Europe compared to the US. Titled “Practices of European and American Venture Capitalists: homogeneity and heterogeneity at work,” it draws on the most comprehensive European VC survey to date, covering 611 managers across 396 firms, representing 55% of market capitalisation and €130 billion under management.
Similar outcomes, shared foundations
Despite the prevailing perception that US venture capital consistently outperforms, the data reports nearly identical performance metrics between European and US VCs with similar returns, failure rates, and equivalent top-tier outcomes. This challenges a persistent assumption that Europe is structurally weaker.
The Gold Standard of deal structuring converges in venture capital contracts. Pro rata rights are widely used and largely inflexible, with approximately 80% adoption. Anti-dilution provisions are standard, and board control is typically governed by strict, non-negotiable terms.
Across both regions, venture capitalists place overwhelming importance on the management team in decision-making. Some 96% attribute success to it, while 92% identify it as the primary cause of failure.
Different ways of investing
European and US VCs achieve similar results but differ in deal sourcing, valuation, and risk-sharing. European VCs have a narrower deal flow, engaging with fewer opportunities—meeting about 17 management teams to close a deal versus 28 in the US. They conduct fewer partner reviews (7 vs. 10) and due diligence processes (3.3 vs. 4.8), while issuing a similar number of term sheets (1.7 in both regions).
Differences deepen when looking at how investment decisions are made. While investors on both sides overwhelmingly agree that the team determines success—95% cite it as the key factor—US investors also prioritise business fundamentals like the business model (83%), product (74%), and market size (68%). European VCs assign less importance to the business model (43%), strategic fit (43%), and other fundamentals. For founders, this creates a shift in expectations: credibility and commitment carry more weight in Europe, while US investors demand stronger validation of scalability and financial potential.
This distinction extends to perceptions of the ideal founder. In Europe, investors tend to back individuals, focusing on passion, drive, and commitment. In the US, the focus is more on the team as a unit: cohesion, organisational structure, interpersonal dynamics and ability to scale.
Valuation practices follow a similar divide. European VCs anchor decisions in on current market conditions, using comparables and ownership targets, whereas US investors prefer forward-looking methods, pricing companies based on projected growth and future exits. “The result is a different pricing logic: Europe rewards realism, while the US rewards ambition. For founders, misjudging this difference can mean mispricing the company—and missing the deal,” comments Audencia Professor Benjamin Le Pendeven
Syndication highlights another contrast. US VCs tend to prioritise raising capital and spreading risk, whereas European VCs place greater emphasis on accessing complementary expertise. Deals are structured not just around funding, but around knowledge and networks. This creates a more collaborative investment model, but one that can also move more cautiously.
Implications for Founders and Policymakers
Some elements of venture capital transfer easily across borders, such as standardised contracts and return targets. Pro rata rights are widely used, anti-dilution provisions are standard, and board control is tightly defined. But more nuanced capabilities—evaluating new models, judging valuations, and assessing team cohesion—depend on locally embedded, tacit knowledge. As a result, meaningful differences persist despite shared frameworks.
These differences have clear implications for founders. “When pitching in the US, founders need to highlight the strength of their business model, the size of the opportunity, and credible financial projections. In Europe, there’s more emphasis on the person behind the project—so passion, commitment and experience matter just as much, along with realistic, comparable-based valuations,” says Audencia Professor Benjamin Le Pendeven.
Europe’s venture capital sector is capable of delivering competitive returns, it is not underperforming. What it lacks is scale, density, and fluid capital across growth stages. The study thus offers valuable practical guidance for Europe’s innovation ecosystem:
- expand early-stage deal flow to increase exposure to high-potential startups
- improve access to late-stage capital so companies can scale within Europe
- strengthen collaboration across investors to maximise expertise and networks
For European policymakers, the message is clear: venture capital is not a one-size-fits-all model and cannot be imported. Efforts to replicate the US model—particularly Silicon Valley—run the risk of overlooking local conditions.
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The study:
- “Practices of European and American venture capitalists: homogeneity and heterogeneity at work”
- Upload the full PDF article
- Digest presentation
*The authors:
- Benjamin Le Pendeven, Associate Professor, Audencia Business School
- Jeroen Verbouw, Assistant Professor, IE Business School
- Anna Söderblom, PhD, Affiliated Researcher, Stockholm School of Economics (SSE)
- José Martí, Full Professor of Finance, Universidad Complutense de Madrid
- Sophie Manigart, Full Professor, Vlerick Business School and Ghent University
- Massimo G. Colombo, Full Professor, Politecnico di Milano
- Massimiliano Guerini, Associate Professor, Politecnico di Milano
- Christian Fisch, Associate Professor, University of Luxembourg
