Alexander Thees

Europe vs US: Where Do Funds Really Generate Alpha?

The core message of the provided transcript is that Europe’s venture ecosystem has materially improved, but the route to capturing alpha remains contested: should European founders and LPs rely on local European managers, or partner with US platforms that bring scale, exit experience, and transatlantic access? The moderator frames the debate around whether US and European funds are producing comparable alpha, with a few outliers driving much of the return. Greg opens from the institutional LP perspective, noting that his program was built mostly toward the US over the last twenty years and has generated “tremendous returns,” while Europe has been catching up in average performance. The central question becomes whether investors are missing European value, and if so whether that value is best accessed through US platforms or local funds. Alex then grounds the discussion in valuation data and exit markets. He says European Series B pre-money valuations are about 44% to 45% below US median levels, while emphasizing that this is a structural market difference rather than proof that US companies are better. He links higher US valuations to faster scaling in a less fragmented market and, more importantly, to exit opportunities, arguing that NASDAQ IPO valuations can justify higher entry prices. Philippe adds that the median gap does not apply to Europe’s top companies: elite founders such as Lovable, Synthesia, and ElevenLabs raise at similar valuations to US peers. He argues that US funds have moved earlier in Europe because they now see comparable talent, ambition, and potential to build global category leaders, while also stressing that local European presence is a major competitive advantage. Hendrik challenges the idea that the best European seed deals now overwhelmingly choose US funds, arguing that more European entrepreneurs are choosing European leads because of resilience, serenity, and a desire to avoid being pulled too heavily toward the US. He cites a recent growth funding case where a European tech team accepted a term sheet one-third below US offers because they wanted most of the funding to remain European. This leads into a sovereignty discussion, especially around defense and AI, where Greg notes that European defense founders may increasingly care not only about their GP’s location but also about where that GP’s capital comes from. The Stark example is used to illustrate how US investors on cap tables may create future tension when contracts are with European governments. Philippe argues for a partnership model rather than a binary choice. He criticizes US funds that do many European seed deals without meaningful follow-on support, saying this inflates seed prices and creates negative signaling for unfunded companies. NEA’s stated approach is to leave pre-seed and seed opportunities largely to European managers, then partner at Series A when elite founders want access to scale, Fortune 500 distribution, US listings, and international expansion. Alex closes the provided portion by saying public investors like KfW should not replace private capital but invite it, and that foreign capital should not be condemned because US investor interest is evidence that Europe has become an attractive market. Philippe reinforces the economic stakes by citing US venture capital’s disproportionate contribution to GDP growth, public market capitalization, and hiring, arguing that replicating even part of that innovation economy in Europe would be significant.