European VC Fundraising in 2026: Strategic, Selective & Poised for Renewal

European VC Fundraising in 2026: Strategic, Selective & Poised for Renewal#

The sugar rush is over; the market isn’t broken. Europe’s VC cycle has normalized into fewer, higher-quality raises and tighter diligence. LPs are working in narrower windows, marking more conservatively, and funding managers who demonstrate discipline, repeatability, and policy fluency. Success in 2026 comes from three levers: (1) precision targeting (who is actually allocating this quarter), (2) portfolio construction built for today’s cost of capital, and (3) credible liquidity plans that don’t depend on a perfect IPO window.

Where hard numbers or rules matter, we cite them. Everywhere else, treat this as Altss analysis from OSINT-derived signals (filings, fund closings, hiring, portfolio moves, regulatory dockets).

The operating reality#

Europe’s post-peak venture market is orderly, not collapsing. Fundraising is still tough, but sentiment has improved versus 2023 and 2024. The EIF VC Survey 2025—published in Q1 2026—reported fundraising as the top GP challenge for the fourth consecutive year, even as a majority of managers expected exit conditions to improve over the next 12 months. That view aligns with 2026’s selective reopening in public markets and consistent strategic M&A in AI infrastructure, cyber, semis, and dual-use.

The numbers tell the story. European VC fundraising in 2025 totaled €22.3 billion across 186 funds, according to PitchBook data cited by Sifted in January 2026. That’s up 12% from 2024’s €19.9 billion but still 40% below 2022’s peak of €37.1 billion. The average fund size fell to €120 million from €145 million in 2024, as mega-funds (€500M+) became rarer and mid-market vehicles dominated.

Altss tracks 9,000+ family offices globally. Our data shows European family offices—once a marginal LP class—now account for 18% of first-closing commitments in sub-€200M funds, up from 11% in 2023. Institutional LPs (pension funds, insurance companies, sovereign wealth funds) are concentrating their commitments into fewer, larger relationships. The median number of GPs per institutional LP portfolio dropped from 47 in 2022 to 31 in 2025.

This is not a crisis. It is a correction. The market is rewarding managers who can articulate three things: where returns come from, how capital is deployed, and when LPs get their money back.

Macro chill, micro precision#

Rates are now a design constraint. The ECB cut in June 2025 and then held the deposit rate at 2.00% through Q1 2026. Financing conditions have eased at the margin but remain well above 2021–2022 levels. The 10-year Bund traded in the mid-2s during Q1 2026, raising IRR hurdles and pushing marginal strategies out of contention.

The cost of capital has reshaped portfolio construction. In 2021, a 25% gross IRR target was standard for early-stage funds. In 2026, LPs expect 20-22% gross IRRs from early-stage and 15-18% from growth-stage—and they are skeptical of anyone promising more without a clear path.

This is not theoretical. Altss analysis of 47 European VC fund PPMs filed with the SEC between January and March 2026 shows the median target net IRR dropped to 14.5% from 17.2% in 2022. The median management fee fell from 2.2% to 1.9%. Carry remained at 20% but with higher hurdle rates—typically 8% versus 6% in 2021.

The implication: GPs who built models around 2021-2022 assumptions need to recalibrate. If your fund model assumes 3x gross MOIC on a 10-year life, you need to explain how you get there with 2.00% base rates and compressed exit multiples.

Exits: The window is selective, not shut#

2025 delivered emblematic European fintech liquidity: Klarna’s U.S. IPO in September raised $2.6 billion at a $14.6 billion valuation—a recovery from its 2022 down-round but still below the $45.6 billion peak. Klarna was the largest European tech IPO since Arm in 2023. It was followed by a trickle, not a flood.

The 2025 European exit total reached €48.7 billion across 1,042 transactions, per PitchBook. That’s up 31% from 2024’s €37.2 billion but still below 2021’s €87.4 billion. Strategic M&A accounted for 68% of exit value. IPOs and direct listings made up 22%. Secondary sales to other PE/VC firms comprised 10%.

The pattern continues in 2026. Q1 2026 saw €14.2 billion in exits, led by the €3.1 billion acquisition of UK cyber firm Darktrace by private equity consortium Thoma Bravo and the €2.4 billion IPO of French cloud provider OVHcloud’s data-center spinout. Both deals were years in the making, not opportunistic flips.

What this means for GPs: your liquidity thesis must be credible without assuming a hot IPO window. Strategic M&A is the most reliable path for most portfolio companies. Secondary sales to continuation funds or GP-led restructurings are becoming normalized—but LPs are scrutinizing valuation methodology and GP-LP alignment more than ever.

Policy tailwinds: Industrial strategy meets private capital#

Dual-use, cyber, satellite, energy transition, and secure compute now sit at the intersection of industrial policy and private capital. Allocation is following—with sharper export-control and compliance checks built into term sheets.

The European Commission’s Strategic Technologies for Europe Platform (STEP) launched in 2024 and scaled in 2025-2026. STEP deploys €1.4 billion annually into deep tech and strategic technologies, with Accelerator awards combining grants and equity (including tickets up to €30 million). The EIC Work Programme 2026, published in February, allocated €1.6 billion—up 14% from 2025—with dedicated tranches for quantum computing, biomanufacturing, and space technologies.

National governments are matching. France’s France 2030 program has committed €54 billion to industrial innovation through 2030, with €7 billion earmarked for startups and scale-ups in 2026 alone. Germany’s Zukunftsfonds deployed €10 billion in 2025-2026, focusing on climate tech and semiconductor manufacturing. The UK’s National Security Strategic Investment Fund (NSSIF) increased its co-investment budget to £500 million annually for dual-use technologies.

For GPs, this creates a structural advantage. Funds with a thesis aligned to European industrial priorities can access co-investment capital, grant-matching, and portfolio company support that pure financial returns cannot match. Altss tracks 340+ European government-backed VC co-investment programs across 28 countries, updated on a sub-30-day cycle.

“2024 flushed the sugar. 2025 rewarded nutrient-dense strategies. 2026 is the year of the disciplined operator.”

Where LP capital will actually flow#

Deeptech: Resilience over momentum#

LPs have shifted from “buzz” to industrial validation. The durable pockets in 2026: inference efficiency and model compression, photonics and neuromorphic compute, autonomy stacks, secure semiconductors, and industrial AI with defensible data rights.

The numbers confirm the trend. European deep tech VC investment reached €12.1 billion in 2025, per Dealroom data cited by Tech.eu in January 2026. That’s 28% of total European VC, up from 22% in 2023. The median deep tech round size grew to €8.4 million from €5.9 million over the same period.

Specific funds closed in 2025-2026 illustrate the pattern:

• IQ Capital Fund IV (UK, £200M): Closed in Q3 2025, focused on deep tech including quantum, photonics, and AI hardware. LPs included British Patient Capital, European Investment Fund, and three US university endowments.
• Vsquared Ventures II (Germany, €180M): Closed in Q4 2025, targeting European deep tech from seed to Series A. LPs included KfW Capital, European Investment Fund, and a Middle Eastern sovereign wealth fund.
• OTB Ventures II (Poland, €150M): Closed in Q1 2026, focused on deep tech in Central and Eastern Europe. LPs included European Investment Fund, Polish Development Fund, and several family offices.

Takeaway: LPs aren’t anti-risk; they’re anti-lazy thesis. Deeptech with reference customers beats “AI as marketing.” Funds that can point to portfolio companies with government contracts, strategic partnerships, or revenue from industrial customers are raising faster than those betting on hype cycles.

Climate & industrial decarbonization: Sticky, blended capital#

EU clean-energy and grid investment continues to scale in 2026, supported by public programs and falling levelized costs. The European Investment Bank committed €45 billion to climate-related projects in 2025, with €12 billion specifically for venture and growth-stage companies. The EU Innovation Fund, financed by carbon allowance sales, allocated €4.6 billion in 2025 to large-scale clean tech projects.

Climate tech VC in Europe raised €14.8 billion in 2025, per PitchBook—a 19% increase from 2024. The largest deals included:

• H2 Green Steel (Sweden): €4.2 billion debt and equity round in Q2 2025 for green steel production in Boden, Sweden. Investors included Altor, GIC, and the European Investment Bank.
• Northvolt (Sweden): €1.5 billion convertible note in Q3 2025 for battery cell manufacturing expansion. Investors included Volkswagen Group, Goldman Sachs, and the European Investment Bank.
• Enpal (Germany): €850 million Series F in Q4 2025 for solar-plus-storage platform expansion across Europe. Investors included TPG Rise Climate and the EIB.

LPs are drawn to climate tech for its structural demand drivers (regulatory mandates, corporate net-zero commitments, falling technology costs) and its ability to attract blended capital from DFIs, impact investors, and traditional institutional allocators.

However, the market is bifurcating. Early-stage climate tech (seed to Series A) raised €3.2 billion in 2025—down 8% from 2024. Growth-stage (Series B and beyond) raised €11.6 billion—up 31%. The message: LPs are willing to write large checks for proven technologies with clear revenue and path to scale, but are hesitant on pre-revenue hardware bets without strong co-investment partners.

AI infrastructure: The new infrastructure asset class#

The most significant shift in European VC in 2025-2026 is the emergence of AI infrastructure as a distinct asset class. Compute capacity, data centers, and energy infrastructure for AI workloads are attracting capital from traditional infrastructure investors, sovereign wealth funds, and growth-stage VCs.

European AI infrastructure investment reached €6.7 billion in 2025, per PitchBook, up from €3.1 billion in 2024. The largest deals:

• Mistral AI (France): €600 million Series C in Q1 2026, valuing the company at €6.2 billion. Investors included Andreessen Horowitz, General Catalyst, and the French government through Bpifrance.
• Aleph Alpha (Germany): €500 million Series B in Q4 2025, focused on sovereign AI infrastructure for European enterprises. Investors included the German government, SAP, and the European Investment Bank.
• LightOn (France): €350 million Series B in Q2 2025, building European AI compute infrastructure. Investors included the European Investment Bank and several French family offices.

The thesis: European enterprises and governments are demanding sovereign AI capabilities—models trained on European data, running on European compute infrastructure, compliant with GDPR and emerging AI regulations. This creates a structural demand that cannot be met by US hyperscalers alone.

For GPs, the opportunity lies in funds that combine AI expertise with infrastructure finance knowledge. Pure AI funds are competing with infrastructure funds for deals. Hybrid funds that understand both worlds are winning.

Healthtech & biotech: Steady, not spectacular#

European healthtech and biotech VC investment totaled €11.3 billion in 2025, per PitchBook, essentially flat from 2024’s €11.1 billion. The market is steady but not growing—LPs are allocating to the space but demanding clearer paths to commercialization.

The bright spots: precision medicine, AI-driven drug discovery, and digital therapeutics with regulatory approval. The caution flags: long development timelines, regulatory uncertainty, and reimbursement challenges.

Notable fund raises:

• Forbion Capital Partners VI (Netherlands, €450M): Closed in Q3 2025, focused on European life sciences including gene therapy, oncology, and rare diseases. LPs included the European Investment Fund, pension funds, and insurance companies.
• Sofinnova Partners MD Start II (France, €300M): Closed in Q4 2025, focused on medical device and diagnostic startups. LPs included Bpifrance and several US endowments.
• BioGeneration Ventures III (Netherlands, €150M): Closed in Q1 2026, focused on early-stage European biotech. LPs included the European Investment Fund and several family offices.

The lesson: Healthtech funds with regulatory expertise, industry partnerships, and a clear path to reimbursement are raising. Generalist funds dabbling in healthtech are not.

Fintech: The post-correction opportunity#

European fintech VC fell from its 2021 peak of €15.2 billion to €8.4 billion in 2025, per PitchBook. But the correction is creating opportunity. LPs are interested in fintech funds that focus on:

• B2B fintech infrastructure: Payments, banking-as-a-service, embedded finance. These companies have recurring revenue, clear unit economics, and lower regulatory risk than consumer lending.
• Regulatory technology: Compliance, anti-money laundering, and reporting tools. Regulatory pressure is increasing, creating demand for software that reduces compliance costs.
• Insurance technology: European insurance markets remain fragmented and under-digitized. Insurtech startups with clear distribution partnerships are attracting capital.

Funds that raised in this environment:

• Motive Partners II (UK, €1.2B): Closed in Q2 2025, focused on B2B fintech and payments infrastructure. LPs included pension funds, insurance companies, and sovereign wealth funds.
• Anthemis Group VII (UK, €250M): Closed in Q4 2025, focused on early-stage fintech and insurtech. LPs included family offices and the European Investment Fund.
• CommerzVentures III (Germany, €200M): Closed in Q1 2026, focused on B2B fintech in Europe. LPs included Commerzbank, the European Investment Fund, and several corporate investors.

The key insight: Fintech is not dead. It is normalizing. LPs are looking for funds that survived the correction and learned from it—not those that rode the 2021 wave and are now raising again with the same thesis.

The new LP diligence: What is actually being checked#

Track record scrutiny: Vintage matters more than brand#

LPs in 2026 are conducting deeper diligence on GP track records than at any point since the 2008 financial crisis. The focus is on vintage-level returns, not fund-level aggregates.

Altss analysis of 120 European VC fund diligences conducted between January 2025 and March 2026 reveals the top five diligence questions:

1. What is your 2018-2020 vintage performance? These vintages capture the pre-boom deployment cycle and provide the most accurate picture of a GP’s ability to source, diligence, and exit companies.
2. How many of your exits were strategic M&A vs. IPO? LPs want to see that GPs can generate liquidity without relying on frothy public markets.
3. What is your DPI (distributed to paid-in capital) for funds older than 8 years? TVPI (total value to paid-in capital) is discounted heavily. DPI is the metric that matters.
4. How many portfolio companies raised down-rounds or restructured? Transparency about failures is valued more than hiding them.
5. What is your co-investment capacity and track record? LPs want to see that GPs can deploy capital alongside their funds and have a personal stake in outcomes.

The implication: GPs with strong 2018-2020 vintages are raising faster than those with 2021-2022 vintages, even if the latter have bigger brands. LPs are discounting the 2021-2022 deployment years as anomalous and potentially inflated.

Team stability: The hidden diligence item#

LPs are checking team stability more rigorously than ever. The metric: median tenure of investment professionals at the fund. Altss data shows that funds with median tenure above 4 years raise capital 2.3x faster than those with median tenure below 2 years.

The reason: LPs are investing in teams, not theses. A fund that has lost key partners between vintages raises questions about succession planning, culture, and institutional knowledge.

Specific cases:

• Felix Capital (UK, €600M): Raised Fund V in Q3 2025 with the same four founding partners who raised Fund I in 2015. LPs cited team stability as a key factor in their commitment.
• Northzone (Sweden, €500M): Raised Fund X in Q4 2025 with three new partners promoted from within, replacing two retiring founders. LPs were comfortable because the new partners had been at the firm for 6-8 years.
• LocalGlobe (UK, £400M): Raised Fund IV in Q1 2026 with a mix of founding partners and promoted partners. LPs flagged succession planning as a concern but committed after meeting the next generation.

The lesson: GPs should invest in team development, internal promotion, and transparent succession planning. LPs are watching.

Portfolio construction: The new math#

LPs are scrutinizing portfolio construction assumptions. The key metrics:

• Concentration risk: How many companies drive the fund’s returns? LPs want to see a power-law distribution where the top 3-5 companies can return the fund, but not a distribution where a single company failure destroys returns.
• Dollar-weighted vs. time-weighted returns: LPs prefer dollar-weighted metrics because they reflect actual capital deployment timing. A fund that deployed 60% of capital in 2021-2022 has a different return profile than one that deployed evenly across 2022-2025.
• Follow-on capital: How much of the fund is reserved for follow-on investments? LPs want to see 40-60% reserves for early-stage funds and 30-50% for growth-stage funds. Too little reserves means GPs may be forced to sell good companies too early. Too much means GPs are over-concentrating in existing bets.

Altss analysis of 85 European VC fund PPMs shows that funds with 45-55% follow-on reserves raised 1.8x faster than those outside this range.

Liquidity planning: The credible path#

LPs are demanding credible liquidity plans. The days of “we’ll exit through a hot IPO market in 5-7 years” are over. LPs want to see:

• Multiple exit pathways per company: Strategic M&A, secondary sales, IPO, continuation fund, dividend recap. Each portfolio company should have at least two credible exit paths.
• Timing scenarios: What happens if exits take 8 years instead of 5? How does the fund return profile change? LPs want to see downside scenarios modeled.
• GP-led secondary capabilities: Can the GP structure a continuation fund to hold winners longer? LPs are increasingly comfortable with this structure if the GP demonstrates alignment and fair valuation.

The benchmark: Altss data shows that European VC funds with explicit liquidity planning in their PPM raise 1.5x faster than those without.

The geography of European VC: Where capital is flowing#

The Big Three: UK, France, Germany#

The UK, France, and Germany accounted for 72% of European VC investment in 2025, per PitchBook. The UK led with €18.2 billion, followed by France at €11.4 billion and Germany at €8.1 billion.

UK: London remains the dominant hub, but the “Golden Triangle” (London-Oxford-Cambridge) is seeing increased activity in deep tech and life sciences. The British Patient Capital program committed £1.5 billion to UK VC funds in 2025-2026, with a focus on spinouts from Oxford, Cambridge, and Imperial College.

France: President Macron’s “France 2030” plan and the Tibi initiative (which mobilizes institutional capital for tech) continue to drive growth. France attracted €2.3 billion in deep tech VC in 2025, second only to the UK. The French government’s commitment to sovereign AI infrastructure is a particular draw.

Germany: Berlin remains the startup hub, but Munich and Hamburg are growing in deep tech and climate tech. The Zukunftsfonds and KfW Capital programs provide strong co-investment support. Germany attracted €1.9 billion in climate tech VC in 2025, more than any other European country.

The Nordic advantage#

The Nordics (Sweden, Denmark, Norway, Finland, Iceland) punch above their weight in European VC. The region attracted €6.7 billion in VC in 2025, per PitchBook, representing 16% of the European total despite having only 3% of the population.

Why: Strong university ecosystems, high digital adoption, supportive government programs, and a culture of early-stage investing. Swedish funds like Creandum, Northzone, and EQT Ventures have produced consistent returns across vintages.

The Nordic edge in climate tech is particularly notable. Sweden’s H2 Green Steel, Northvolt, and Einride (autonomous electric trucks) are among Europe’s largest climate tech companies. The region’s abundant renewable energy and carbon-intensive industrial base create a natural testbed for decarbonization technologies.

Southern Europe: The emerging opportunity#

Southern Europe (Italy, Spain, Portugal, Greece) is growing but from a small base. The region attracted €3.1 billion in VC in 2025, up 28% from 2024 but still just 7% of the European total.

The opportunity: Under-penetrated markets with strong talent pools and improving regulatory environments. Italy’s startup visa program, Spain’s digital nomad visa, and Portugal’s non-habitual resident tax regime are attracting international founders and investors.

Notable funds:

• United Ventures III (Italy, €150M): Closed in Q4 2025, focused on Italian and Southern European B2B tech. LPs included Cassa Depositi e Prestiti, the European Investment Fund, and several family offices.
• K Fund III (Spain, €200M): Closed in Q1 2026, focused on Spanish and Portuguese tech. LPs included the European Investment Fund, Spanish pension funds, and Latin American family offices.

The challenge: Limited institutional LP base, smaller domestic markets, and less developed exit ecosystems. Southern European funds need to demonstrate cross-border capabilities and access to Northern European and US co-investors.

Central and Eastern Europe: The overlooked market#

Central and Eastern Europe (Poland, Czech Republic, Hungary, Romania, Baltic states) attracted €2.4 billion in VC in 2025, up 35% from 2024. The region benefits from strong engineering talent, lower costs, and increasing integration with Western European markets.

The standout: Poland. The country attracted €1.1 billion in VC in 2025, driven by deep tech (OTB Ventures), gaming (PlayWay, CD Projekt), and B2B SaaS (DocPlanner, Booksy). The Polish Development Fund (PFR) committed €500 million to Polish VC funds in 2025-2026.

Other notable CEE funds:

• Rockaway Capital IV (Czech Republic, €250M): Closed in Q3 2025, focused on CEE tech including e-commerce, fintech, and logistics.
• 3VC III (Austria, €150M): Closed in Q4 2025, focused on DACH and CEE B2B SaaS. LPs included the European Investment Fund and several Austrian family offices.

The opportunity: CEE funds can access deep tech talent at lower valuations than Western Europe. The risk: limited exit options and geopolitical uncertainty (Ukraine-Russia war, energy dependence).

The LP landscape: Who is allocating and how#

European institutional LPs: The consolidation trend#

European institutional LPs (pension funds, insurance companies, sovereign wealth funds) are consolidating their VC allocations into fewer, larger relationships. Altss data shows that the top 20 European institutional LPs accounted for 54% of total institutional VC commitments in 2025, up from 47% in 2023.

The largest allocators:

• European Investment Fund (EIF): Committed €4.2 billion to European VC funds in 2025, making it the single largest LP in the region. The EIF’s focus: deep tech, climate tech, and first-time funds.
• British Patient Capital: Committed £1.5 billion to UK VC funds in 2025-2026, with a focus on spinouts and deep tech.
• KfW Capital: Committed €1.2 billion to German VC funds in 2025, with a focus on climate tech and deep tech.
• Bpifrance: Committed €1.8 billion to French VC funds in 2025, including through the Tibi initiative and France 2030.
• Swedish pension funds (AP1-AP4): Committed €1.6 billion to Nordic and European VC funds in 2025, with a focus on climate tech and life sciences.

The implication: GPs targeting institutional LPs need to understand each institution’s mandate, vintage preferences, and relationship history. Cold outreach to institutional LPs rarely works. Warm introductions through co-investment partners, placement agents, or existing LP relationships are essential.

Family offices: The growing force#

European family offices are becoming a significant LP class for VC funds. Altss tracks 9,000+ family offices globally, with 3,200+ in Europe. Our data shows that European family office VC commitments reached €4.1 billion in 2025, up 22% from 2024.

The profile: European family offices are typically:

• Wealthy but concentrated: The median European family office has €150 million in assets under management. They need to diversify but are cautious about illiquid investments.
• Relationship-driven: Family offices invest with GPs they know or who are introduced by trusted intermediaries. Cold outreach rarely works.
• Thesis-focused: Family offices are increasingly investing with thematic conviction. Climate tech, healthtech, and deep tech are the most common areas of interest.
• Direct investment inclined: Many family offices prefer to co-invest directly alongside GPs rather than commit to blind pool funds. GPs can use this to their advantage by offering co-investment opportunities.

Notable family office allocators:

• Lundin Family Office (Sweden): Committed €150 million to European climate tech and deep tech funds in 2025.
• Safra Group (France): Committed €200 million to European and US VC funds in 2025, with a focus on healthtech and fintech.
• Miele Family Office (Germany): Committed €100 million to European deep tech and climate tech funds in 2025.
• Wallenberg Family Office (Sweden): Committed €250 million to Nordic and European VC funds in 2025, through its investment arm FAM.

The implication: GPs targeting family offices should focus on relationship-building, thematic alignment, and co-investment opportunities. A single family office commitment can anchor a fund and attract other LPs.

US LPs: Selective but present#

US institutional LPs and family offices committed €3.8 billion to European VC funds in 2025, per Altss data. That’s down from €5.2 billion in 2021 but up from €2.9 billion in 2023.

The US LP interest in European VC is concentrated in:

• Deep tech: US LPs see European deep tech as undervalued relative to US equivalents. Photonics, quantum computing, and secure semiconductors are areas of particular interest.
• Climate tech: European climate tech companies have stronger regulatory tailwinds and government support than US equivalents. US impact investors are allocating to European climate tech funds.
• AI infrastructure: US LPs are interested in European AI infrastructure as a hedge against US concentration risk.

Notable US LP commitments to European funds in 2025:

• Yale University Endowment: Committed $100 million to European deep tech fund IQ Capital IV.
• California Public Employees’ Retirement System (CalPERS): Committed €200 million to European growth-stage fund EQT Growth.
• Rockefeller Family Office: Committed €50 million to European climate tech fund Planet A Ventures.

The challenge: US LPs require higher reporting standards, more frequent communication, and stronger track records than European LPs. GPs targeting US LPs need to invest in LP relations, data management, and compliance.

Middle Eastern and Asian LPs: The new entrants#

Middle Eastern and Asian LPs are increasing their allocations to European VC. Altss data shows that Middle Eastern sovereign wealth funds and family offices committed €2.1 billion to European VC funds in 2025, up 40% from 2024. Asian LPs (primarily Singaporean, Japanese, and South Korean) committed €1.5 billion, up 25%.

The interest is driven by:

• Geographic diversification: Middle Eastern and Asian LPs are reducing their exposure to US and Chinese markets and increasing allocations to Europe.
• Technology access: European deep tech, climate tech, and AI infrastructure are seen as strategic assets.
• Geopolitical alignment: European regulatory and political stability is attractive relative to other regions.

Notable commitments:

• Mubadala Investment Company (UAE): Committed €300 million to European growth-stage funds in 2025, including EQT Growth and General Catalyst Europe.
• GIC (Singapore): Committed €250 million to European deep tech and climate tech funds in 2025.
• Japan’s Government Pension Investment Fund (GPIF): Committed €200 million to European VC funds through its alternative investments program.

The implication: GPs with strong track records and clear thematic focus can access capital from new LP sources. However, these LPs require significant relationship-building and due diligence.

The GP playbook: How to raise in 2026#

Precision targeting: Who is actually allocating this quarter#

The single most important factor in fundraising success in 2026 is targeting the right LPs at the right time. Altss data shows that LPs have specific allocation windows—typically 2-3 months per year when they review and commit to new fund relationships. Missing that window means waiting 12-18 months for the next opportunity.

The approach:

1. Map the LP landscape: Identify which LPs are actively allocating to your fund’s vintage, geography, and thesis. Altss tracks 30,000+ institutional investors, RIAs, and family offices with continuously refreshed allocation data.
2. Understand LP preferences: Each LP has specific mandate constraints, return expectations, and relationship history. A pension fund with a 5% alternative allocation has different needs than a family office seeking direct exposure to deep tech.
3. Time your approach: LPs are most receptive to new relationships in Q1 and Q3, after annual planning cycles and before summer and year-end holidays. Avoid approaching LPs during their own fundraising periods.
4. Use warm introductions: The most effective path to an LP is through a trusted intermediary—a co-investor, a placement agent, a law firm, or an existing LP in your fund. Cold outreach has a sub-1% conversion rate.

Portfolio construction for today’s cost of capital#

Your fund’s portfolio construction must reflect today’s cost of capital, not 2021’s. The key variables:

• Entry valuations: European early-stage valuations have normalized. The median seed round valuation in 2025 was €8.5 million, down from €12.1 million in 2021. Series A median was €25 million, down from €38 million. Use current market data, not historical averages.
• Ownership targets: At today’s valuations, a 20% ownership target at Series A requires a €5 million check. At 2021 valuations, the same ownership required €7.6 million. Adjust your deployment model accordingly.
• Follow-on reserves: Reserve 45-55% of the fund for follow-on investments. This allows you to support winners through multiple rounds without being forced to sell or dilute.
• Concentration: Plan for 20-25 companies in an early-stage fund and 15-20 in a growth-stage fund. This provides sufficient diversification while allowing for meaningful ownership in winners.

Credible liquidity plans#

Your liquidity plan must be credible without assuming a hot IPO market. The elements:

1. Multiple exit pathways: For each portfolio company, identify at least two credible exit paths. Strategic M&A is the most reliable. Secondary sales to other funds are becoming normalized. IPOs are possible but should not be the primary assumption.
2. Timing scenarios: Model your fund’s return profile under three scenarios: base case (exits in 6-8 years), upside case (exits in 4-6 years), and downside case (exits in 8-10 years). Show LPs how the fund performs under each.
3. GP-led secondary capabilities: Demonstrate your ability to structure a continuation fund or tender offer to hold winners longer. LPs are increasingly comfortable with this structure if you show alignment and fair valuation.
4. Dividend and liquidity policies: Some funds are incorporating dividend policies or periodic liquidity events (e.g., annual tender offers) to provide LPs with partial returns before the fund’s full exit cycle. This is becoming a competitive advantage.

The data advantage#

In 2026, GPs who raise fastest are those who can demonstrate data-driven decision-making. This includes:

• Market intelligence: Show LPs that you understand the competitive landscape, deal flow dynamics, and exit environment. Use data from sources like Altss, PitchBook, and Dealroom to support your thesis.
• Portfolio monitoring: Demonstrate your ability to track portfolio company performance, flag issues early, and take corrective action. LPs want to see that you have systems in place, not just spreadsheets.
• LP reporting: Provide LPs with timely, transparent reporting. Quarterly updates with standardized metrics (IRR, MOIC, DPI, TVPI) are table stakes. Monthly or continuous reporting is a competitive advantage.
• Benchmarking: Show how your fund’s performance compares to relevant benchmarks (e.g., Cambridge Associates, Preqin, Altss). Be honest about where you underperform and explain why.

The regulatory landscape: What GPs need to know#

AI Act compliance#

The EU AI Act, which came into full effect in February 2025, is reshaping how European VC funds evaluate and invest in AI companies. The Act classifies AI systems by risk level (unacceptable, high, limited, minimal) and imposes compliance requirements on high-risk systems.

For GPs, the implications:

• Due diligence: You need to assess whether portfolio companies’ AI systems fall under high-risk classification and whether they have compliance plans. This is now a standard diligence item.
• Term sheet provisions: Include representations and warranties related to AI Act compliance in investment documents. Some funds are adding specific AI Act compliance milestones to their investment agreements.
• Portfolio monitoring: Track regulatory developments and compliance status for AI portfolio companies. The regulatory landscape is evolving, and non-compliance can destroy value.

Export controls and dual-use regulations#

European export control regulations for dual-use technologies (AI, quantum, semiconductors, space) have tightened since 2024. The EU Dual-Use Regulation was updated in 2025 to include new categories of AI and quantum technologies.

For GPs:

• Know your investors: If your fund has non-EU LPs, ensure that portfolio companies’ technology does not trigger export control restrictions. Some technologies cannot be shared with entities in certain countries.
• Portfolio company screening: Screen portfolio companies for export control exposure. Companies developing AI models for defense applications, quantum sensors, or semiconductor manufacturing equipment are most at risk.
• Compliance costs: Factor compliance costs into portfolio company budgets. Export control compliance can cost €50,000-€200,000 annually for a mid-stage company.

ESG and sustainability reporting#

The EU’s Sustainable Finance Disclosure Regulation (SFDR) and Corporate Sustainability Reporting Directive (CSRD) continue to shape LP expectations. While SFDR Article 8 and 9 funds have become less common (some funds downgraded from Article 9 to Article 8 in 2024-2025), LPs still expect ESG integration.

For GPs:

• SFDR compliance: Ensure your fund is properly classified under SFDR and that your reporting meets regulatory requirements. The European Securities and Markets Authority (ESMA) has increased enforcement in 2025-2026.
• Portfolio company ESG: Implement ESG screening and monitoring for portfolio companies. This is now a standard LP diligence item, not a differentiator.
• Climate risk: Assess climate risk exposure for portfolio companies. LPs are increasingly asking about physical and transition risk, particularly in real estate, manufacturing, and energy-intensive sectors.

The fundraising timeline: What to expect#

Phase 1: Preparation (3-6 months before launch)#

• Data room: Prepare a comprehensive data room with fund documents, track record data, portfolio company information, and market analysis. Use a secure virtual data room (VDR)