Europe must not rely on the 28th regime to mobilise startup capital, says Philippe Tibi

Europe does not have the luxury of waiting for sweeping EU reforms to mobilise more scale-up capital for venture capital and startups, argues economist Philippe Tibi.

“We don’t have the time to wait,” said Tibi, speaking at the GoWest conference in Gothenburg last month. “The geopolitical forces are not waiting – and we lose weight by the minute.”

That urgency, he says, makes flagship EU projects such as the Capital Markets Union and the proposed “28th regime” necessary but insufficient. Both aim to harmonise investment rules across the bloc. Both, Tibi said, will take years to deliver.

Tibi says unlocking more institutional capital for venture will be a key lever to boost European competitiveness on a shorter timeframe.

Flipping the script

European pension funds currently allocate just 0.018% of their assets to venture capital, compared with 1.9% in the US – a more than 100-fold difference, according to a recent report by World Fund.

Why? It typically comes down to risk. Pension funds, especially, don't want to bet your retirement savings on early-stage ventures that have a high potential to fail.

But Tibi rejects that framing, instead arguing that not investing in European startups presents a more fundamental threat.

Startups will be funded regardless, either by European institutions or by foreign capital, he said, "the choice is...are you going to be funded by the US or by European VC?”

Rather than asking why venture is risky, he says big institutionals should “do the homework” and “justify why [they] do not invest in venture.”

With technology increasingly tied to defence, healthcare, and industrial resilience, avoiding venture risk, he suggests, may simply shift Europe toward a deeper strategic dependency.

Moreover, Tibi argues that venture capital isn’t too risky if managed correctly: “Risk is reduced by diversification… If you miss a legitimate asset class, you miss an opportunity to reduce the risk of the portfolio,” he says.

Tibi to Europe?

The warning comes from a prominent figure in Europe's tech scene.

Tibi is the brainchild of the French government’s Tibi initiative, launched in 2019 to channel domestic institutional capital into venture and growth equity. The programme has since mobilised over €13bn from French insurers such as AXA, Crédit Agricole Assurances, Groupama, and is widely credited with helping France close part of its late-stage funding gap.

Now, governments across Europe, including those in the Netherlands, Poland, and the Nordics, are looking to learn from the model.

Currently, European pension funds currently allocate just 0.018% of their assets to venture capital, compared with 1.9% in the US – a more than 100-fold difference, according to a recent report by World Fund.

Tibi argues the solution cannot come from Brussels alone. Ecosystems, he said, are national before they are European. They are built on trust, dense networks, and close ties between investors and public authorities. That makes national governments the fastest lever for change.

At the same time, no single country can solve the problem on its own. “Germany is not going to save the day. France is not going to save the day. The Nordics are not going to save the day,” Tibi said.

Europe’s competitors – the US and China – operate at "continental scale," said Tibi. Europe must do the same, not by forcing cooperation, but by aligning interests.

Better VC funding across the bloc, Tibi argued, ultimately benefits companies at home.