Why US Institutions Are Finally Taking Europe Seriously (And What They're Actually Thinking)
The calls are coming. US endowments, pensions, insurance funds and family offices —they're mapping Europe seriously.
Not out of charity. Out of necessity.
The Dollar Rotation Everyone Sees Coming
US institutions are being strategic. They see the setup:
Dollar strength can't last forever. Europe is at the centre of AI talent. Geographic concentration risk is real.
When the rotation happens—and it will—they don't want to be scrambling.
They want positions in place.
The smart money is mapping now, before it's obvious.
This is the window.
The Macro Case They're Building
US allocators are running the numbers on Europe:
Talent density approaching US levels with seasoned entrepreneurs (London, Berlin, Paris, Stockholm = serious tech hubs now)
AI technical talent is already here - While everyone watches OpenAI and Anthropic, they're missing that Meta AI, DeepMind, and Mistral have their core research teams in Europe. The PhD pipeline from ETH Zurich, Cambridge, Oxford, EPFL is producing the researchers building foundation models. The infrastructure layer might be US-dominated, but the AI application layer is being built in Europe with clear breakouts: ElevenLabs (voice AI, $1B+ valuation), Lovable/Wordware (AI-native dev tools), Mistral (European foundation models), Synthesia (video AI), Helsing (defense AI). US institutions are realizing: you can't win AI without European exposure.
Exit markets maturing (IPOs returning, strategic M&A heating up, secondary liquidity improving)
Regulatory clarity improving (ironically, Europe's heavy regulation is now more predictable than US uncertainty)
Capital efficiency (European founders build with half the capital, often better unit economics)
The case isn't "maybe Europe works." It's "Alpha is in Europe."
What US Allocators Are Actually Asking
1. "Can Europe actually produce venture-scale returns?"
Translation: "We know Europe builds good companies, but do they exit big enough to justify venture return hurdles?"
What they want to hear:
Billion-dollar+ exits
Public market proof (listings, not just private valuations)
Return multiples comparable to US (3-5x+ fund returns)
The evidence they're finding:
Spotify: $50B+ public company
UiPath: $30B+ at peak
Adyen: $60B+ at peak
Klarna, Revolut, Trade Republic, 11 Labs, Loveable, Minstral: multi-billion private valuations with paths to public markets
Their conclusion: Europe can produce outliers. Not as frequently as US, but enough to matter.
2. "Do we back US funds with European exposure or native European funds?"
This is the real tension. Already back US brands that give them exposure to Europe (later stage). Back authentic European champions for true local alpha.
But the emphasis is shifting toward authentic European players.
Why? Because the best founders increasingly choose local funds who understand their market, can move faster, aligned on their success (not an option) and actively sit on Boards to help the company scale.
3. "Who's going to be the next generational winner we can partner with for 20 years?"
This is the real question.
US institutions don't want transaction. They want partnership on a decades-long journey.
They got into Sequoia Fund V and rode it to Fund XX. They backed Benchmark Fund II and never left. They found a16z early and scaled with them.
Now they're asking: Who's the European fund we back in Fund III-V that becomes our core manager for the next two decades?
What This Means for European Funds
The moment is now.
US institutions are mapping. Taking calls. Running models. Building conviction.
This is generational LP capital coming into view.
The funds that capture it will scale to $1B+ vehicles and become European institutions.
The ones that miss it will watch from the sidelines.
