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# EIF's Müller-Marbach: “Investing in European Venture Is a Return Decision, Not a Goodwill Gesture”
- URL: https://www.therecursive.com/eifs-muller-marbach-investing-in-european-venture-is-a-return-decision-not-a-goodwill-gesture/
- Published: 2026-10-07T11:09:39.000Z
- Updated: 2026-10-07T11:09:39.000Z
- Description: A conversation between Petr Šíma, General Partner at DEPO Ventures, and Marcel Müller-Marbach, Senior Regional Representative for Austria, Czech Republic and Slovakia of the European Investment Fund (EIF).
- Author: Petr Šíma
- Tags: Guest Articles, DEPO Ventures, Engaged Investments

Europe has plenty of private wealth, and European venture has a strong track record. Still, only a small share of global venture capital is invested here. Over breakfast, [Marcel Müller-Marbach](https://www.linkedin.com/in/marcel-m%C3%BCller-marbach-35a11010/?ref=therecursive.com) and I talked about why that gap exists, what the data shows, and why investing in European venture is a return decision, not a gesture of goodwill. **If you want to hear more from him in person, he will have a keynote** during our [Engaged Investments](https://engaged.investments/en/home?ref=therecursive.com) conference in Prague on October 21st.

## A mismatch worth acting on

**Marcel:** There's one message I really want to get across, and it's the opportunity built into European venture. Look at the assets we have in Europe, meaning the value of financial assets held by European households. Compare that with how well European venture has performed. Then **look at how little global VC investment happens in Europe**. The contrast is striking.

**Petr:** The ratio is very small; it's almost nothing.

**Marcel:** It certainly remains insignificant. We have a lot of money and we have great performance, **yet the money isn't going into entrepreneurship, innovation and growth** on our own continent. This creates a massive opportunity for investors. **European VC is one of the most attractive asset classes you can be in**, and this is evidenced by data.

**Petr:** Exactly. I often hear: *"Yes, but we invest in American VC because it's safer and makes more money."*

**Marcel:** To be fair, that used to be true, decades ago. The story has changed. Now it's a story of Europe catching up. There is no gap in IRR (*Internal Rate of Return*), just to refer to one of key performance indicators. **Over the last ten years, Europe has actually outperformed the US.** The same holds true for cash returns, i.e. when looking at DPI (*Distributed to Paid-In Capital*). Where a distinction can be made still in favor of the US is the speed of cash return, leading to a higher ability to recycle and redeploy capital for investors.

> But a European investor should wonder: does that difference justify sending all your money overseas versus putting it to work for our own continent’s resilience and prosperity? We believe it doesn't. 

You may still want to diversify geographically, but you shouldn't miss out completely on what your own continent offers.

**Petr:** I agree. There is one thing, though. Most European funds are small, and it might appear easier for a small fund to outperform a large one. US GPs manage ten times more money, or even more.

**Marcel:** Allow me to give you a different perspective here. You're right that US funds tend to be bigger. But that's because they also serve **a segment which in Europe so far has been rather neglected: the scale-up market**. 

European funds are smaller, but in their own segment that's not a disadvantage. In scale-up capital, on the other hand, Europe has almost nothing. The EU’s annual funding gap vs. the US in scale-up financing is about €70 billion, leading successful companies to relocate to the US for accessing respective finance.

**It is one of EIF’s strategic key objectives to address this market failure**. The European Tech Champions Initiative (ETCI) that EIF launched in 2023 has been a milestone in that respect. Through this initiative we have supported 15 leading mega funds in Europe so far, i.e. funds targeting to raise > €1 billion and hence being able to write 3-digit million tickets in companies’ funding rounds. To date, almost 50 companies have received funding from [ETCI](https://www.eif.org/flagship-initiatives/european-tech-champions-initiative/etci-1-progress?ref=therecursive.com) (The European Tech Champions Initiative) already and there are 15 unicorns in the portfolio. The successor mandate, ETCI 2.0, will be operational soon.

**Petr:** This is a great initiative really, as it hurts every time I see the money go to the US and then come back to Europe. [We'll have a session on the maturity of CEE, and of Europe as a whole](https://www.therecursive.com/engaged-investments-2026/). Investing and scaling in the US is much easier. You have one market, and everyone, from talent to investors, speaks the same language. But **Europe is changing**. More and more regions now have enough investors for startups to get off the ground.

**Marcel:** So, to sum up the case we're making, and that we care deeply about: **the opportunity comes from a mismatch**. We have huge amounts of available capital and strong performance over the last 20 years, yet Europe gets only a small share of global venture investment. 

> That mismatch is what creates the opportunity. Investors need to understand it and act on it.

## What the numbers say

**Petr:** Let’s have a look at money, IRRs and DPIs. IRRs are still quite high in European venture, aren't they?

**Marcel:** They're high in both the US and Europe. The surprise is this: look at the 5-, 10-, 15- and 25-year horizons, and in three of those four, **Europe has outperformed the US on IRR**. Most people raise their eyebrows at that because they don't expect it.

Even more remarkable is the speed at which DPI of European venture has developed, a performance indicator that has received more spotlight in recent years. Take our own EIF data. In 2016 we analyzed DPIs of our investee funds for the vintages 2007 and beyond. Our best-performing fund had a DPI of 1.4x. Now, ten years later, **a DPI of 1.4x wouldn't even get a fund into our top 50 list**. To form part of that list nowadays, **a fund needs to have a DPI of above 1.72x, the top performing fund having a DPI of >14x**.

At this opportunity I am happy to highlight that EIF, in collaboration with BlackRock, is making performance data publicly available: via [*trackvc.eu*](https://engage.eif.org/trackvc/?ref=therecursive.com) you can access free of charge historical performance data (IRR, TVPI and DPI) on **European VC and PE over the last 20 years**. The data includes, but is not limited to, EIF’s own portfolio.

**Petr:** And the future looks even brighter.

**Marcel:** Absolutely. Performance is one part of it. The other question is **where that performance comes from**. Today we see industries that barely existed for venture some fifteen years ago. Take [space](https://www.therecursive.com/tag/space-tech/). Fifteen years ago, who knew SpaceX? Who would have invested into space through the European venture ecosystem? Very few players, if any. Now it's a segment everyone is watching closely. And there's little other capital competing with VC there, so venture will have that space largely to itself for some time.

**Petr:** So, do you think European VC as an [asset class](https://www.therecursive.com/investors-stop-treating-the-global-south-as-a-monolithic-asset-class-alina-truhina/) will outperform other asset classes, or at least compete with them?

**Marcel:** Every sophisticated institutional investor wants to diversify, both across asset classes and within each asset class. Looking back over the last ten years or more, you'd probably say the interesting place for your money to be in was the S&P 500 or the NASDAQ. They're fully liquid and delivered fairly consistently significant double-digit returns year after year. But you'd only say that if you were a young investor who had never lived through a bubble burst, as we saw in the years 2000-2002\. I'm not saying stay out of the NASDAQ. I'm saying there's a real chance, especially with recent valuations, that **some of the froth could come off that market**. That's why you need exposure to a broad range of assets.

And there is another consideration: Every company on NASDAQ was once private and financed by venture. *Is it smart to invest only once a company has already completed most of its growth and value creation?* Probably not. You need to be **present across the whole spectrum**.

## Risk, done properly

**Petr:** Now the question that matters a lot to European LPs. Across your portfolio, what's the probability of losing money [investing in funds](https://www.therecursive.com/tag/investments/)? How many funds didn't return 1x?

**Marcel:** Let me answer that a bit differently, because I can't give you an exact number. We have invested into more than 1,700 funds over more than 30 years of activity. That isn't only venture. It also includes private equity, infrastructure and private credit, but venture is a large share. Of course, some of those funds performed very poorly. This said, our experience is: **if you diversify the right way (meaning you keep investing consistently across vintages), your chances of losing money as a steady, repeat investor are close to zero**.

**Petr:** I fully agree. It's a risky asset class, but done properly, *the risk is limited*.

**Marcel:** If you bet on one fund or one company, the risk is very high. If you invest sophisticatedly, allocating a set amount or share of your portfolio to the asset class year after year, the risk steadily falls and the upside steadily rises. Losing money becomes a remote possibility. For that kind of investor, it is misleading to call venture a risky asset class. It's a mistake to equate venture with risk, as we so often do in European languages. It's much more of an opportunity.

**Petr:** One investor described it to me as getting a free lottery ticket: the upside is unlimited.

**Marcel:** You can only lose your money once — and even that is theoretical, because over 30 years our statistics indicate that **investing consistently across funds and vintages substantially reduce the risk of an overall loss**. The upside, meanwhile, is extremely high. 

> Leaving that potential on the table simply makes no sense!