Pension funds are the cornerstone of long-term investment in Europe. With their ability to deploy patient capital, they are uniquely positioned to fuel innovation, accelerate the green and digital transition, and strengthen Europe’s economic resilience. Venture capital, in turn, is the asset class that drives breakthrough technologies and high-growth companies.

‍Yet, while US pension funds allocate over 10% of assets to private assets, European pension funds invest less than 0.1%. This report explores the reasons behind that gap, the structural barriers holding Europe back, and the opportunities to unlock pension capital for innovation, growth, and competitiveness.

Europe’s Opportunity

Europe’s innovation economy faces a capital paradox. Despite global leadership in science and technology, European startups often lack access to the long-term capital needed to scale. Pension systems still rely heavily on pay-as-you-go models, leaving few investable assets.

The Draghi Report on European competitiveness made it clear: without stronger participation from institutional investors, Europe risks losing ground in the global race for innovation. The data confirms it, while European startups can raise significant early rounds, far fewer reach unicorn scale compared to their US peers. The gap widens as funding amounts increase. 

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