{"id":89291,"date":"2026-07-08T12:15:10","date_gmt":"2026-07-08T12:15:10","guid":{"rendered":"https:\/\/www.europesays.com\/europe\/89291\/"},"modified":"2026-07-08T12:15:10","modified_gmt":"2026-07-08T12:15:10","slug":"europes-heat-wave-killed-people-by-the-thousands","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/europe\/89291\/","title":{"rendered":"Europe\u2019s Heat Wave Killed People by the Thousands"},"content":{"rendered":"

The problem is not a lack of startups or capital. European firms raised<\/a> $61 billion for climate-focused funds last year, far outpacing those in the U.S., which brought in $37 billion, according to Sightline Climate. The problem is that almost all of that European money flows to infrastructure and private equity investors backing more mature technologies. Early-stage startups also enjoy relatively strong backing, but the market starves the growth-stage middle. <\/p>\n

The issue is both cultural and structural: Most of the bloc\u2019s investors are unaccustomed to making the high-risk, high-reward bets required to scale climate tech. They also often can\u2019t access tools like loan and equity guarantees, which remain limited in Europe, nor are there the institutional limited partners and growth-stage co-investors that could help de-risk those investments.<\/p>\n

\u201cIt\u2019s got nothing to do with technology. It\u2019s nothing to do with execution capability. It\u2019s purely due to access to capital,\u201d Craig Douglas, a founding partner at the Berlin-based multi-stage venture firm World Fund, told me. That means companies that have outgrown early-stage financing but are still considered too small or too risky for larger institutional investors often either shutter or seek capital abroad. Logically, if given the chance, most<\/a> startups<\/a> choose<\/a> the latter. <\/p>\n

\u201cYou\u2019re allowing U.S. investors to cherry pick European assets,\u201d Douglas told me. The result? \u201cEuropean technologies and European companies that are successful end up enriching American pension funds rather than European pension funds.\u201d <\/p>\n

Ioannis Ioannou, an associate professor of strategy and entrepreneurship at the London Business School, told me that the consequences extend beyond the purely financial, emphasizing that Europe runs a strategic risk by relying on foreign capital for its climate tech scale-up. \u201cIt means you lose the supply chains. You lose the skills. You lose the fine manufacturing capabilities. You lose the so-called green jobs.\u201d <\/p>\n

Douglas and the other specialists in European climate finance I spoke with emphasized that the ever-ominous \u201cmissing middle<\/a>\u201d funding gap is particularly pronounced in Europe. A report<\/a> Douglas co-authored earlier this year, aptly titled \u201cThe Series B Funding Gap In European Climate Tech,\u201d quantifies the problem. While 25% of U.S. climate tech companies that raised a seed round from 2010 to 2020 had moved on to secure a Series B by the first half of last year \u2014 regardless of what country the capital came from \u2014 only 15% of European companies were able to do the same. That has created a growing backlog of startups stuck in a financing limbo: The lineup of European companies looking to raise a Series B grew from 220 in 2020 to 533 in the first half of last year. <\/p>\n

While smaller climate tech funds in Europe and the U.S. have raised similar amounts of funding for early-stage startups \u2014 $18.5 billion in Europe versus $20.2 billion in the U.S. from 2020 through the first half of 2025 \u2014 the gap at the larger end of the market is stark. The U.S closed 29 funds of at least $500 million or more, compared with just 11 in Europe. These larger funds are the ones capable of writing the $25 million to $100 million checks companies desperately need to commercialize and scale. As Douglas\u2019 report notes, fewer than 20% of European climate funds are pursuing a growth strategy, with over 70% making early-stage investments only.<\/p>\n

\u201cWhen we raised World Fund One, we were the largest [debut] climate fund in Europe, and we\u2019re a \u20ac300 million fund. That\u2019s nuts,\u201d Douglas told me. World Fund aims to help companies \u201creach growth-investor readiness\u201d by supporting startups from their seed through Series B, a model Douglas would like to see replicated throughout the region. \u201cWe need another 20 World Funds out there in the market to start filling this capital shortfall,\u201d he told me. The firm announced<\/a> last February that it\u2019s raising a second, \u20ac500 million fund, but that\u2019s yet to close. <\/p>\n

One of the primary reasons European growth-stage investors have less capital to deploy comes down to the structure of European financial markets, which remain heavily reliant on bank lending rather than higher-risk equity investments. As a result, institutional investors like pension funds, insurers, and endowments never built the habit of investing in venture capital, which shows up when comparing the LP bases across the two regions: In the U.S., about 72% of VC funding comes from private institutional investors, compared with just 30% in Europe. Public money, much of it from the European Investment Fund, helps bridge the gap, but it simply cannot match the scale of private institutions.<\/p>\n

Pension funds are a telling case. They\u2019re among the largest sources of venture capital in the U.S., allocating nearly 2% of their assets to VC. But in the EU, they allot just 0.018% \u2014 roughly 100 times less. And because the U.S. also has far more money sitting in pension funds than Europe does, this makes the gap in actual dollars reaching startups wider still. Without that deep pool of institutional funding, Europe struggles to support the $500 million- to $1 billion-plus funds that would have the wherewithal to lead growth-stage rounds. <\/p>\n

The result is a self-reinforcing cycle. Large growth funds require large institutional backers, but precisely because European pension funds and other institutional investors haven\u2019t stepped up, the venture market remains too small to absorb the kinds of $100 million-plus commitments pension investors managing billions of dollars typically want to make. \u201cThey don\u2019t see [venture] as an asset class that they can invest in,\u201d Douglas told me. \u201cBut the reason that it doesn\u2019t exist is because they\u2019re not investing themselves in that asset class.\u201d <\/p>\n

If there\u2019s one thing I learned from my reporting, it\u2019s that white these problems run deep, Europe is hardly standing still. Policymakers and investors are well aware of the disconnect and are now experimenting with strategies to close the scale-up gap and affirm the region\u2019s position as a leader in climate innovation. <\/p>\n

To attract more institutional investment, for example, a growing number of initiatives aim to create \u201cfunds of funds\u201d and other government-backed structures that pool money from pension funds, insurers, banks, foundations, and other large investors. The fund-of-funds structure lets an institution make a single, large commitment; then, intermediary asset managers break that capital into smaller chunks and invest it across multiple venture funds. This gives large-ticket investors the scale and diversification they want without requiring them to conduct due diligence on dozens of small venture funds; venture managers, in turn, gain access to much larger pools of capital. <\/p>\n

Germany\u2019s Wachstumsfonds Deutschland<\/a>, for example, is a \u20ac1 billion fund-of-funds backed by more than 20 investors \u2014 including insurers, pension funds, and large family offices \u2014 that invests across the German and broader European VC ecosystem, with a focus on growth-stage capital. The EU\u2019s European Tech Champions Initiative follows a similar model. The European Investment Bank and six member-states launched the initiative in 2023 with \u20ac3.9 billion to back regional growth-stage VC funds. Now it\u2019s raising a second tranche<\/a> of money \u2014 targeting \u20ac15 billion \u2014 and is bringing in private institutional capital for the first time. <\/p>\n

Europe\u2019s member states have also pushed institutional investors toward coordinated capital commitments in recent years, with France\u2019s Tibi initiative<\/a> serving as the model. Launched in 2019, it tasks the French government with vetting venture and growth funds, with those that qualify becoming eligible for backing from initiative\u2019s signatories, primarily insurers and some pension funds. The program has attracted about \u20ac31 billion in commitments to date. Germany adopted a similar approach with its WIN initiative<\/a>, which has now secured \u20ac12 billion in pledges from more than 30 major corporations \u2014 including Deutsche Bank, BlackRock, and Henkel \u2014 to invest in the country\u2019s venture ecosystem by 2030.<\/p>\n

The Irish Venture Capital Association has proposed<\/a> a similar model, while Tibi\u2019s founder \u2014 the economist Philippe Tibi himself \u2014 has been on a tour<\/a> essentially pitching the idea across the bloc. But Ioannou isn\u2019t convinced that creating country-specific Tibi-style commitments is the most efficient way for the region to scale climate tech.<\/p>\n

\u201cI\u2019m not sure that fragmentation will actually solve the problem,\u201d he told me. \u201cMaybe it will be better if all that capital came into one larger fund, whereby the scale-ups wouldn\u2019t have to deal with country level fragmentation, regulations, jurisdictions, legal, and all that kind of stuff.\u201d<\/p>\n

That\u2019s the idea behind the new \u20ac5 billion pan-EU Scaleup Europe Fund<\/a>, which is designed to invest directly in European deep-tech startups \u2014 climate tech very much included \u2014 rather than through venture funds. Announced<\/a> last year, the fund has already secured<\/a> roughly \u20ac2.5 billion in capital commitments from both the European Commission and private institutional investors, with a second fundraising round planned for the second half of this year. EQT, Europe\u2019s largest private-markets investor, will manage the funds, ultimately deciding which growth-stage companies to back.<\/p>\n

\u201cEverything happened so quickly, from agreeing to it to executing on it to allocating it,\u201d Douglas told me. \u201cIn effect, it happened in less than a year, which in the European context is crazy.\u201d <\/p>\n

The idea is to replicate what the combination of U.S. federal support and deep private capital markets has accomplished, Dimitri Colin, a policy officer at the cleantech policy and advocacy group Cleantech for Europe, told me. \u201cThe whole idea is to bring what worked in the U.S. into European public financing policies,\u201d he said. Colin extolled the virtues of the Biden-era Loan Programs Office, as well as the efficacy of other Inflation Reduction Act-fueled efforts such as generous production tax credits when it comes to derisking investment in first-of-a-kind tech. <\/p>\n

In our interview as well as in a recent report<\/a>, Colin argued that EU funding should move from prioritizing grants to loan and equity guarantees in its forthcoming budget for the years 2028 through 2034. That\u2019s because guarantees have proven far more effective than government grants at bringing private investors into climate tech, Colin told me. According to his report, every euro of grants or equity capital channeled through the VC arm of the European Innovation Council yields about \u20ac3 in additional investment. That\u2019s nothing to scoff at, but it pales in comparison with InvestEU, the bloc\u2019s \u20ac26.2 billion investment guarantee program. Every euro of guarantees from the latter attracts nearly \u20ac14.80 in private follow-on capital.<\/p>\n

\u201cThe main idea behind the whole budget should be to focus on the leverage effect,\u201d Colin told me, referring to how much additional private funding government backing generates. \u201cHow can the little public money that we have in Europe \u2014 because the fiscal environment is, of course, very constrained \u2014 more easily mobilize private money? That\u2019s what the LPO did well.\u201d <\/p>\n

Colin also wants to change the EU\u2019s public funding rules to make it easier to subsidize ongoing operational expenses for early-stage cleantech facilities, similar in effect to U.S. production tax credits. Currently, European policymakers often structure public support for these projects as capex grants paid out after construction is complete. This type of support is more difficult for private investors to underwrite since it doesn\u2019t directly improve the plant\u2019s ongoing operating economics, one of the risks investors care about most. <\/p>\n

Getting these financing structures right is a matter of life or death for many of Europe\u2019s most promising climate tech industries. Douglas points to batteries, critical minerals, semiconductors, and green molecules as sectors with the technological readiness to scale domestically \u2014 but not yet the capital. \u201cOne of the major risks in every sector we know is who\u2019s going to be there, who\u2019s going to be able to go with us on that journey to make sure the company has the capital to be successful,\u201d he told me. Still, he sees reason for optimism. Because if there\u2019s one thing that can be said about the E.U. at this moment, it\u2019s that \u201cthey\u2019re definitely taking it seriously.\u201d<\/p>\n

\u201cThe perfect solution doesn\u2019t exist,\u201d Colin told me. \u201cWe need to align the funding models, we need public de-risking tools, but we need also a true industrial strategy, China has done that, the US has done that with the IRA,\u201d he explained. Now it\u2019s Europe\u2019s turn. <\/p>\n","protected":false},"excerpt":{"rendered":"The problem is not a lack of startups or capital. European firms raised $61 billion for climate-focused funds…\n","protected":false},"author":2,"featured_media":89292,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[47016,47014,2111,47015,603,2851,88,4,47017,46,761],"class_list":["post-89291","post","type-post","status-publish","format-standard","has-post-thumbnail","category-europe","tag-adaptation","tag-am-briefing","tag-climate","tag-climate-tech","tag-economy","tag-electric-vehicles","tag-energy","tag-europe","tag-homepage","tag-politics","tag-sustainability"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/89291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/comments?post=89291"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/89291\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media\/89292"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media?parent=89291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/categories?post=89291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/tags?post=89291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}