The first-of-its-kind Europe-wide look at the power of pensions to drive innovation, growth and sovereignty across Europe.
Introduction
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.
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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.
Report Partners
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Europe has the talent, the ideas and the ambition. Now it needs the capital.
"As Mario Draghi underlined, Europe's competitiveness and sovereignty depend on accelerating innovation. That means unlocking the big pools of long-term capital held by our institutional investors. By investing in Europe's future, they will also deliver strong returns for Europe's savers."
Innovation is not a luxury - it is critical to sustainable growth.
"Together, we can transform pension funds from passive investors into active builders of our economy: fuelling innovation, creating jobs, and unlocking stronger returns for savers while ensuring more capital also flows to the innovators too often overlooked"
As always in Europe, together we can make a difference.
"The ‘Venture & growth capital in Europe’ report provides new insights into the risks and constraints that limit pension funds’ investment in equity markets. Lack of knowledge and expertise, the high risk of venture capital investments and regulatory barriers are some of them. The report also flags successful national initiatives and funds investing inequity. This report will feed in the reflection on how to foster a more active participation of pension funds in support of our businesses, competitiveness and innovation."
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The win-win
Pension Fund Involvement in Venture & Growth Space means better outcomes for pensioners, accelerating the net-zero and digital transitions, and positioning Europe at the forefront of global innovation.
VC-backed companies in Europe have already created more than $3.5 trillion in value, with hundreds scaling past €100 million in revenues. The pipeline of high-growth firms exists, what’s missing is patient capital at scale.
Too much of Europe’s innovation value flows to $3.5+ trillion in value, with hundreds surpassing €100 million in revenues. The growth engine is here, what’s missing is long-term capital to scale it further.
Venture capital has delivered consistent double-digit long-term returns for US pensions. Europe can replicate it, benefitting both pensioners and the wider economy.
Pension funds have multiple entry points into venture, from diversified funds-of-funds to growth-stage allocations and co-investments. These approaches allow exposure while carefully managing risk.
Venture capital drives the innovation that underpins Europe’s strategic priorities, from climate and health to digitalisation and technology sovereignty. Aligning pensions with these goals creates both impact and return.
Even a small shift, just 1-2% of pension assets, could channel an additional €37.5 billion annually into European VC. This would close the funding gap and reshape Europe’s competitiveness.
Contributors
The findings reflect the voices of experts across pensions, policy, and venture who generously contributed their experiences and perspectives. Their insights shape a clearer picture of the opportunities and challenges ahead.
Report Partners
A heartfelt thank you to our partners for your trust, support, and commitment in making this possible.
Capital. Innovation. Security.
Pension capital is the untapped engine of Europe’s prosperity. This report demonstrates how aligning long-term savings with venture can deliver sustainable returns, drive systemic innovation, and secure retirement futures for generations. We invite you to read, reflect, and share your perspective, and to join the conversation on shaping Europe’s future.