European LPs and why a higher risk appetite could pay for itself, Self-identity & compensation, and more
Learn directly from Inovia, Teklas Ventures, Eleven Ventures, Cape May Wealth and other leading European companies and VCs.
Here we go, with a new packed newsletter for you. Let’s get into it.
We’ve got some standout submissions on the community insights platform to share:
To get featured, go here.
Emerging fund managers face countless challenges when setting up and structuring their first VC fund. The process is complex, daunting, and full of pitfalls, from navigating legal frameworks to engaging with the right service providers, the foundations you lay now will shape your growth trajectory.
That’s why we’re planning an exclusive 3-hour masterclass designed to equip emerging managers with the insights, strategies, and tools needed to tackle these challenges head-on.
Inovia's Michael McGraw European LPs and why a higher risk appetite could pay for itself
In this episode of the EUVC podcast, Andreas sits down with Michael McGraw, Principal at Inovia Capital, a Venture Capital firm headquartered in Canada but making waves in Europe.
Inovia has €2.4B in assets under management and a track record of backing companies like Cohere, Lightspeed, Neo4j, and Wealthsimple. Mike brings a unique perspective shaped by his journey from LP at CDPQ—one of the world’s largest pension funds—to leading growth-stage investments at Inovia. Together, we’ll dive deep into the evolving role of European LPs, exploring why embracing a higher risk appetite could yield outsized returns and drive systemic innovation.
We’ll also discuss Inovia’s strategy for scaling Series B to pre-IPO companies across North America and Europe, shedding light on key challenges and opportunities in the software space. Whether you’re an LP curious about market dynamics or a founder navigating growth-stage fundraising, this episode is packed with insights you won’t want to miss.
Watch it here or add it to your episodes on Apple or Spotify 🎧 chapters for easy navigation available on the Spotify/Apple episode.
Join Europe’s premier PE/VC conferences with Zero One Hundred Conferences!
From Vienna (Feb 18-20) to Amsterdam (Apr 2-4) and Budapest (May 14-16), the 2025 Zero One Hundred Conferences offer intimate, carefully curated networking with top decision-makers from firms like 500 Global, Balderton, EIF, Eurazeo, Id4 ventures, IOME Family Office, In-Q-Tel, KfW Capital, SOSV, Teachers' Venture Growth, UBS AM, and more!
✍️ Show notes
Deep Dive: European LPs and why a higher risk appetite could pay for itself.
Mike’s perspective is hard won: he was an LP at CDPQ, one of the world’s largest pension funds, and now he's a VC for a global firm in London.
Canada, the Europe of North America (setting the stage)
Structurally, Canada shares a lot of similarities with European countries, from having top tier universities to active government support and robust social benefits.
VC ecosystem is similar to Germany, France and Sweden in terms of capital invested and unicorns
It has also followed the same trajectory with growth stage VC really taking off over the last 5-7 years, a good wave of exit during that same period and the emergence of startup mafias and repeat founders. The flywheel has fully come into motion
All of this has been a very long time in the making. For instance, the Canadian government launched the Canadian Institute for Advanced Research in 1983. Its objective was to finance fundamental research for the advancement of humanity. Its first program was for AI and Robotics and led by Geoffrey Hinton who last week won the Nobel Prize for his work in AI. That’s been forty years in the making.
Many authors from the paper Attention is All You Need actually came from the Canadian education system, including some that studied directly under Hinton
CDPQ’s strategy: plan decades ahead (where does pension money come into the equation)
The one thing Canada has over Europe is a very well structured pension system, often referred to as the Maple 8 who oversee over €1.3T trillion in assets
I joined CDPQ to help launch the Funds and Technology team. The institution was already doing some VC but the growing ecosystem warranted a dedicated team
At face value it isn’t scalable to build a team writing cheques as low as $5-10M for an institution managing hundreds of billions of dollars. However, my view is that CDPQ understood three things: (i) these $5M investments pay for themselves, (ii) they’re required to eventually unlock the $100M+ investments further down the line, and (iii) the stronger ecosystem will benefit the regional economy on which CDPQ depends to get its pension inflows. It just takes time.
CDPQ decided to go even further, helping launch a physical hub for VC offices in order to foster collaboration across the ecosystem and make it an easy go-to place for founders looking for funding. You can think of it as the Sand Hill Road of Montreal.
That strategy is already showing some results today. It has lead to the emergence of several multi-billion-dollar businesses like Lightspeed POS, Hopper, Wealthsimple and more. Shopify itself was financed by OMERS, another one of the Maple 8.
European fundraising observations to date
I haven’t seen as much of that mindset from private European LPs. There are quite a few state development banks which we also have in Canada, but very few scaled private players with ambitious long term mandates.
Part of the issue is a lack of scale. The Canadian Maple 8 average €160B per fund compared to the average of €4B for each of the 86 government pension schemes in the UK. That’s something which is being discussed currently.
It’s also impressive how many LPs simply do not have a VC mandate. I was meeting with a placement agent a few weeks ago and I asked why none of their marketing materials mentioned VC. Her answer was simply that they view it as part of Private Equity. While that’s technically true, it does point to the underlying impression that it’s not meaningful enough to be its own category. And quite often, those who do only go for mega-funds in the US (though that seems to be changing)
I believe that another potential challenge is the lack of commercially-driven incentives for the private sector. In addition to its development bank, in 2013 Canada launched its Venture Capital Action Plan. The program committed $400M across various Canadian funds of funds managers with the state money being First In, Last Out. This means that the additional capital raised by these FoF was Last In, First Out, which can be a boon for IRR. These FoF raised $900M of private capital off the back of the $400M invested by the government. I view this incremental return as exactly what’s required to compensate for the higher risk premium associated with a nascent ecosystem.
In my view that approach brings less distortion to the market than having funds with tax incentives which then allow them to bid up asset prices. It’s also more efficient from a bureaucracy perspective because state organizations are mostly involved at the beginning of the program and then it’s taken over by private managers until it’s renewed a few years later.
Ultimately the issue is not only that Europe is missing out on the next OpenAI. It’s that if that OpenAI is launched like Mistral, a significant chunk of the capital will come from US pension and hence the returns will also go to the US.
A 2023 analysis made by Redstone found that US pension funds have invested approximately 5bn into the German companies with unicorn valuations. German pension funds have invested max 90 million in the same companies.
The person behind
I come from a family of entrepreneurs and I’ve seen both extremes: my mom has been running her own magazine with an employee and a half for the past 25 years while my dad was a VC turned entrepreneur who launched a graph database business 15 years ago which ultimately didn’t make it. This means I’ve experienced all the highs and lows of entrepreneurship and it gives me immense empathy for the founders I speak to.
Funnily enough, at Inovia I ended up investing a significant amount of money into Neo4j, another graph database company. 12 years after my dad’s business went under… Full circle!
Two sayings I’ve learned from my boss and mentor are “when in doubt be generous” and “life is long and the world is small”. It might be very Canadian of me, but I’ve been blown away by the value I’ve received from people I helped years back simply for the sake of it.
Three biggest learnings in venture
Just get out there. Having worked in a big pension where everything comes to you and then Inovia, which also gets a ton of inbound given its dominant position in Canada, it took me a while to adapt my strategy in Europe. In the early years I also had to learn not to take it personally or care if someone didn’t want to engage. Pretty basic stuff for anyone that’s been train in an outbound-driven environment, but I definitely let my ego drive some decisions too much in the beginning. The comfort came with repetition of just doing it and also increasingly believing that what Inovia’s value add of supporting European businesses into their US expansion is quite differentiated.
Spreadsheets will only take you so far. My first job out of university was in big private equity where you’re quite far removed from the actual operations. I started working under former operators at CDPQ and especially at Inovia, which is very operator-led (former Google and Blackberry CFOs as partners). When I entered the venture world, I quickly learned to think about spreadsheets as a 2D representation of a 3D reality. I still care about metrics a lot, but I find a lot more enjoyment trying to understand what they indicate in terms of the people and operations behind them. Similarly, I’ve had many founders express their appreciation for more operationally-minded conversation vs. a siloed focus on their net dollar retention.
The importance of optionality and planning for liquidity early on. The whole world of fundraising right now is about DPI and I’m feeling that myself as an LP across Inovia funds. What I’ve learned though is that it’s rarely a switch you can just flip. The reality is that the best exits are manufactured years in advance and it needs to be an explicit consideration, be through partnerships with potential acquirers or simply making sure that the FP&A function is IPO-ready. And even if it’s only for the VC itself it doesn’t have to be at the detriment of the business at all, especially given the rise of secondary markets and continuation vehicles nowadays.
Strongly held belief you’ve recently had to change your mind on
Less of a controversial viewpoint, more of a philosophical / wellbeing one. People often say time is your most precious resource and while that’s partly true, I’ve come to realize in the last year that headspace is even more important. I’ve realized that even if I created downtime for myself, I usually filled it up with audio books, podcasts, music, tv shows, etc. Instead now I make sure to have moments for reflexion with no distraction whatsoever. It’s been incredibly nice to force that silence.
Top tips from VCs fundraising
Start yesterday. It’s no secret that in many instances LP relationships take years to build and a lot of the magic happens between fundraises. Similarly, at the micro level, you need to prepare for events months in advance. When attending conferences, I’ve learned that some LPs’ schedules are already full two months before the event.
Know your LPs well. Strategies change and people move around. Make sure to be smart about building enough relationships and buy-in within organizations that are strategically important. Think about what you need to do now not to have any regrets are your next fundraise. For instance, in my case, it was actually misunderstanding that a European LP team couldn’t make a decision about Inovia given the North American exposure and that their US counterparts are the decision-makers - spoiler alert, we had zero relationship there.
Do the work for them. LPs are incredibly solicited nowadays. If your story is not extremely straightforward and easily digestible, then it’ll be dead on arrival. For example, when fundraising our last venture fund I actually created a standalone presentation about “why Canada” for a Canadian pension institution. They didn’t know their own backyard well enough and I had to make it seamless for them to learn and ultimately convert. Another example could be to clearly map out the path to a 3-5x+ for each existing fund instead of having the LP try to guess it.
SELF-IDENTITY & COMPENSATION: EU & US Divergence. Part 6.
by Owen Reynolds from Teklas Ventures, the VC arm of a family office associated with Teklas. | Originally published on EUVC.
Over the last few weeks, we’ve dived into the structural economic reasons the EU and the US are diverging. If you’ve followed along, we’ve hit Culture, the Dollar Reserve Discrepancy, the Monetary Premium & Investments, the Land of Liquidity, and Structured Failure.
This week, there’s a structural part that borders on cultural—but is so embedded into business culture that I’m giving its own section. The American Self-Identity is different than Europeans, and strongly impacts final compensation. This in turn dictates the world of corporate incentives and where the best talent finds itself drawn to.
Identifying
Americans are no less tribal or banally bound to that tribe than any other nation. Judging by the most recent election cycle, perhaps more so. Those tribes tend to have less to do with nationality or the past than Europe.
Because most Americans (whether their ancestors arrived by force, by pleasure, or by temptation) have a fractured past, that identity is less anchored in the past. Only the 2,8m people of Native American decent have any true deep connection to the land or place. And even people that look alike may come from different nationalities, tribes, religions, or linguistic groups—some of which may very well be at war in the Old World.
What that floating identity for most means in practice is that greater importance is placed on more recent events. Neighborhoods, socioeconomic level, education, and political group become your identity in the US.
In my opinion, that also means that Americans derive more of their identity from their work. Much as in European names such as Baker, Miller, or Weaver may have indicated years back—you are tied to your profession in America.
In practice this identity means that Americans freely bring their work home with them, share about it at parties, and blur the lines between personal and professional. It also means that the outcomes of work have serious implications on who you are.
Work or Die
In the US, it’s common to say things like “you either work or die”. These are not just sayings. With a brutal lack of a social-safety net, there is truth to these fears. And the middle ground of “potential survival” is so unappealing in America, that it is not enough to keep the most vulnerable from diluting themselves with Fentanyl.
What this does mean is that you have to hustle from day one. This is where the “hustle culture” comes from. It’s not just because we’re putting pressure on students at school—it’s because there’s no back up.
Combining the Work or Die mentality with the fact that Americans draw their identity from their work is a combination for a hard-working—nearly obsessive—work culture.
Working Hours
All that said, do Americans work more than Europeans?
It’s an important question. No one is going to say that Americans work more than Chinese or Indian counterparts, where the Work or Die mentality is perhaps even more deeply rooted. However, a highly driven culture is constantly touted as the key driver between the EU & US divergence.
The truth is odd. The graphic below shows hours worked annually by country in the OECD, with the US in Green in the middle.
Starting on the left, Germans do indeed work an abysmally short work week. Many Northern European countries fit the same mold before hitting a pretty flat area of the curve that starts with Australia and ends with the US.
From then on, Portugal, Estonia, Ireland and a host of other European and Latin American countries pepper the upper ranks of the hardest working in the OECD. This makes sense—Millennials in previously poorer countries in Europe remember what those old days were like. And they want to Hustle Culture their way up the rungs of the ladder. The graphic below shows this play out in geographic terms.
To me the graphic mirrors what we see across Europe. There are incredibly hard-working people—they are rarely the Western European mainstream. They come from other places, or other backgrounds, or countries that haven’t been rich for 3 generations.
Spending Adjustments
There are also several other things to keep in mind when we’re measuring the US and European economies. While different from the capital markets, it’s worth noting these when we’re thinking about the quality of life trade off.
There are several other economic adjustments that impact the monetary calculus. It’s important to know what is included in or driving divergence between calculations of GDP per capita or even purchasing power parity (PPP).
Cup Cake Economics
First, Europeans have a cultural tendency to do more “in-house”. Birthday cakes, gardening, mushroom picking, and family members driving each other around are but a few examples.
The closer family networks evidenced by less social and geographic mobility mean more productivity can be done in-house, not taxed, and not reflected in GDP. I call this the “coffee cake economies”, which I mentioned in the first post. The US sells more of these goods and services, which show up on the official statistics, and make the US economy look larger and “more productive”.
Health Care
Second, health care is significantly smaller part of the economy in Europe. One major reason is that the US national health care program, Medicare cannot negotiate (you read that right: NO negotiation) against pharmaceutical companies. This effectively and sadly means that US pharmaceutical consumers are frequently subsidizing the world’s pharma development. It also explains why some cutting edge medication is available in US markets first—it’s where the big bucks are.
And to be clear, for skeptics, the results are longer average lifespans and lower infant mortality per dollar or euro spent. So European health care, on average, seems to still be hitting the mark. Just catching up would save the US a cumulative estimated $1.1 trillion between 2004 to 2050.
Military
Third, the US spends about $916 on its military—making up 3.4% of GDP, and a shocking 37% of the worlds military spending. This compares to 2.1% of GDP spent in France, 1.5% in Germany, Spain, and the Netherlands—the biggest spenders in major EU economies. One can further imagine if US GDP is already over-inflated for healthcare costs that this is a double whammy.
Correcting for all of these are heroic tastes I’ll leave in the hands of better economists than myself. But these cultural economics help frame the conversation. Its good to keep these things in mind no matter what you’re measuring.
Compensation
All of this matters because of how it plays out in the job market. When the expectation is to work, and your identity is derived from your work—so too is salary tied to that sense of self. Americans are not afraid to tell you what they’re worth, fight for it, and quit if they don’t get what they’re deserved.
Harkening back to the Education component covered in Culture, American MBA grads are taught repeatedly to hire up. Hire the best, compensate the best, lift up the best. Harness the best.
Keeping the best also means sharing. American executives get and give bigger bonuses and bigger equity packages. And because identity is drawn more from work than where you’re from, there’s no shame in pulling yourself up that ladder rung by rung under the noses of your friends and family.
Hard workers get paid better in the US than in Europe. Plain and simple. The bonuses are bigger, the equity shares are bigger. The liquidity and exits are better.
In contrast, Europe has stronger informal economies and ties to family and friends. Health care and the military are not such massive components of spending. But corporates also not share or compensate.
In the end, humans are rational actors—yes, with lots of biases, but rational enough to target the best compensation. When the highest exit potentials and the biggest outcomes are structurally tilted to the US, where will companies favor?
The State of Venture Capital in CEE 2024
Guest post by Roberta Tihomirova, Head of Marketing at Eleven Ventures. | Originally published on Eleven Ventures.
From a handful of pioneering funds to a diverse landscape of investors, the Central and Eastern European region has emerged as a significant player in the European venture capital scene.
Based on extensive research conducted by our investment team over the summer months, complemented by industry insights from various market reports, we present a comprehensive analysis of the current state of venture capital in CEE.
What Investors Get Wrong About Semi-Liquid Private Equity - Tools work best when used as intended
Guest post by Jan Voss, Managing Director at Cape May Wealth | Originally published on Cape May Wealth Weekly.
One of the topics that I get asked most about today is private equity. Within the portfolios of German entrepreneurs and younger family offices, the asset class is still somewhat underrepresented - and while there are certainly reasons that would argue that today is not the best time to invest in private equity, there’s many other asset classes that seem even more challenged today.
And when it comes to investing in private equity, it’s semi-liquid funds that are all the rage: Rather than having to commit to closed-end funds over multiple years, all of which also invest over several years, investors can invest as fast as in one single tranche - allowing them to compound at the expected long-term return from Day 1.
🤗 Join the EUVC Community
Looking for niche, high-quality experiences that prioritize depth over breadth? Consider joining our community focused on delivering content tailored to the experienced VC. Here’s what you can look forward to as a member:
Exclusive Access & Discounts: Priority access to masterclasses with leading GPs & LPs, available on a first-come, first-served basis.
On-Demand Content: A platform with sessions you can access anytime, anywhere complete with presentations, templates and other resources.
Interactive AMAs: Engage directly with top GPs and LPs in exclusive small group sessions — entirely free for community members.
✍🏻 EUVC Masterclass | Marketing & VC Fund Narrative
Your brand is everything. It’s what sets you apart, helps you win the best deals, attract LPs, and ultimately drive your growth. For emerging fund managers, building a credible brand and establishing the right marketing foundations early on are game-changers. Yet, many don’t know where to begin.
Your fund’s narrative is what makes the difference between an LP glancing at your deck or deciding they’re ready to write a check. It’s your brand that makes LPs feel confident they’re partnering with someone who knows how to make magic happen.
We’re planning a masterclass on building strong marketing foundations with a top industry leader. If enough people show interest, we’ll make it happen.
EUVC Masterclass: Benchmarketing for GPs & LPs
In venture, knowledge is power—and benchmarking is the key to unlocking it. Understanding where you stand against your peers is what makes you set realistic expectations, and drive portfolio performance.
For GPs, benchmarking can reveal the strengths and weaknesses of your portfolio, while for LPs, it provides a clearer picture of where your commitments stand in the broader market. Yet, many don't know how to effectively utilize benchmarking tools or interpret the data.
We’re planning a masterclass on mastering the art of benchmarking, led by a top expert in the industry. If enough people express interest, we’ll make it happen!
💬 EUVC Community | LP AMA with Vinthera’s Rodrigo Ferreira
Join us for an exclusive AMA session with Rodrigo Ferreira Investment Director at Vinthera.
Prior to joining Vinthera, Rodrigo Ferreira gained 5 years of experience backing VC fund managers across the globe as Principal and Investment Team lead at boutique fund of funds firm BFP. There he played a key role in over 20 fund investments and managed a portfolio of more than 50 funds with top decile aggregate returns.
This AMA is part of our ongoing series of small-group sessions designed to foster deep, meaningful discussions within the VC community. Participation is free for members of our community, but spots are limited.
🗓️ The VC Conferences You Can’t Miss
There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!
GoWest | 📆 28 - 30 January 2025 | 🇸🇪 Gothenburg, Sweden
Investors Summit Bilbao 2025 | 📆 11 - 12 February 2025 | 🇪🇸 Bilbao, Spain
0100 DACH 2025 | 📆 18 - 20 Feb 2025 | 🇦🇹 Vienna, Austria
0100 Europe 2025 | 📆 02 - 04 April 2025 | 🇳🇱 Amsterdam, The Netherlands
0100 Emerging Europe 2025 | 📆 14-16 May 2025 | 🇭🇺 Budapest, Hungary
GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🇩🇪 Berlin, Germany