In this episode of the EUVC podcast, our host, David Cruz e Silva, talks with Chris Wade, Co-Founder of Isomer Capital, to explore the evolving European venture landscape in 2025. Reflecting on a decade since Isomer’s inception, Chris shares insights on the industry's growth and how Europe has expanded from just 20 unicorns in 2014 to nearly 400 today.
Here’s what’s covered:
02:25 Celebrating 10 Years of Isomer
05:39 The Growth and Future of European Venture Capital
08:43 Challenges and Opportunities in the VC Landscape
17:56 Transparency and Communication in Venture Capital
25:57 The Role of VCs on Company Boards
27:17 Understanding DPI and Secondary Transactions
39:16 The Future of European VC and Emerging Managers
Watch it here or add it to your episodes on Apple or Spotify 🎧, with chapters for easy navigation available on the Spotify/Apple episode.
✍️ Show notes
State of Venture Capital in 2025
The European venture capital scene in 2025 is marked by renewed optimism and a matured ecosystem. David and Chris discuss how European VC has evolved from a nascent market with few unicorns to a mature landscape boasting nearly 400 unicorns. Traditional VC firms and new players, including U.S. firms, corporate VCs, and emerging managers, drive the growth. This diversification has fostered innovation and provided a broader pool of investment opportunities, strengthening the overall ecosystem.
Another trend is the careful balance between maintaining optimism and ensuring rigorous financial discipline. While there is excitement over new technologies and market trends, especially in AI and computational biology, the fundamentals of venture financing remain focused on generating robust financial returns. Discussions around valuation resets, up rounds versus down rounds, and the secondary market reveal that the underlying metrics for successful investments have stayed consistent despite market fluctuations.
Looking ahead, the outlook for European venture capital involves addressing challenges such as increasing transparency in communications with LPs and ensuring political and economic stability. Emerging managers are expected to offer unique value propositions to compete effectively, while established firms emphasize the importance of learning from past investments. The ecosystem is evolving with an eye toward long-term, sustainable growth, aiming to attract larger institutional capital like pension funds while continuing to support entrepreneurial innovation.
Growth of European Venture Capital Compared to Other Markets
European venture capital has experienced significant growth, evolving from a fledgling ecosystem into a mature market. The number of unicorns in Europe has risen from just 20 a few years ago to nearly 400 in 2025, and we’re seeing a shift from a niche market to a broad, dynamic ecosystem. This rapid expansion is fueled by diverse entrants such as traditional VC firms, corporate VCs, and even U.S. players, all contributing to a more robust and competitive landscape.
In terms of market dynamics, European venture capital is showing a favorable trend with an increase in up rounds and a decrease in down rounds, signaling enhanced investor confidence and healthier company valuations. This trend is not just confined to Europe; the discussion underscores that while other regions like Asia and the Middle East are also gaining traction, Europe’s focus on nurturing high-quality, early-stage investments and building a sustainable ecosystem differentiates it from its global peers. The emphasis remains on generating consistent financial returns, even as emerging trends like AI and computational biology influence the industry’s trajectory.
Emerging Sectors in VC
Emerging sectors such as AI, defense tech, and computational biology are drawing significant attention from venture capital investors. Discussions note that AI is increasingly seen as a transformative tool for entrepreneurs, while defense tech is considered even more critical than initially anticipated. In computational biology, breakthroughs like those from DeepMind's AlphaFold have spurred optimism, with investors recognizing these fields as fertile ground for future innovation.
Financial trends within these sectors are also notable. Up-rounds are rising, indicating growing confidence in companies operating in these emerging fields. Despite these shifts, the underlying metrics and investment benchmarks remain consistent. Investors continue to emphasize robust financial returns, balancing the excitement of disruptive technology with the need for disciplined capital allocation.
Looking forward, the overall outlook for these sectors appears promising, albeit with cautious optimism. While the rapid progress in AI, defense tech, and computational biology is fueling market growth, the fundamentals of venture investment still rely on strong, sustainable business models. This balanced approach aims to foster long-term value, positioning these sectors to play a key role in shaping the future of venture capital.
LP Dynamics: Transparency, Fundraising Challenges, and Expectations
LP dynamics in the European venture capital landscape have evolved significantly, with increased emphasis on transparency and communication. The discussion highlights that firms like Isomer have maintained detailed quarterly reporting and regular LPAC meetings to foster open dialogue with limited partners. This transparency manages LP expectations regarding financial performance, particularly around sensitive topics such as DPI and liquidity events. The approach involves candid discussions about up-rounds, down-rounds, and the inherent unpredictability of venture returns, ensuring that LPs remain well-informed about achievements and challenges.
Fundraising challenges also feature prominently, as GPs must balance the drive for ambitious growth with the need for disciplined, sustainable performance. The narrative underscores that while up-rounds signal optimism, they are counterbalanced by the pressure to meet or exceed established financial benchmarks. LPs, increasingly sophisticated in assessing venture capital performance, expect clear, consistent communication and realistic projections. This evolving dynamic between LPs and GPs shapes a more mature ecosystem where transparency and rigorous financial discipline are key to sustaining long-term investor confidence.
Evolution of Secondary Markets and DPI Strategies in VC
David and Chris point out that secondary markets have become highly important in venture capital, particularly in improving DPI (Distributions to Paid-In capital) strategies. Firms increasingly use secondary transactions—including founder secondaries and structured exits—to unlock value and provide liquidity. This evolution allows funds to enhance performance metrics, manage investor expectations, and efficiently demonstrate a commitment to returning capital.
At the same time, fund managers emphasize that these secondary strategies are not merely quick exits but are integrated with long-term growth objectives. The careful balance between achieving a favorable DPI and supporting the sustained growth of portfolio companies reflects a mature approach in the VC ecosystem. This strategy, aimed at maintaining investor confidence while ensuring companies continue to thrive, marks a significant shift toward sustainable value creation in venture capital.
Pension Fund Involvement in Venture Capital
Pension funds are beginning to allocate capital to venture investments, attracted by the potential for high returns in a maturing European VC landscape. However, their participation comes with increased liquidity and transparency requirements, as these institutional investors demand clear, consistent communication regarding performance metrics such as DPI and the overall health of their investments.
At the same time, solutions are emerging to address the liquidity constraints and other operational challenges posed by pension fund investments. VC firms are adapting by refining their secondary market strategies and improving their fundraising processes to meet pension funds' expectations.
Lessons from Isomer’s 10-Year Journey
Over its 10-year journey, Isomer has evolved by embracing a culture of continuous learning and transparency. The firm has strongly emphasized detailed investment memoranda to understand and learn from successes and failures. This approach has enabled Isomer to refine its decision-making process and foster a no-blame culture that values honest self-assessment and ongoing improvement. Such practices have contributed to its ability to navigate market ups and downs, maintain investor confidence, and support portfolio companies over the long term.
For emerging general partners, Isomer’s experience underscores the importance of establishing clear internal processes, setting realistic performance expectations, and building strong LP relationships. The firm's journey illustrates that success in venture capital requires a disciplined approach to investing and a commitment to transparency with stakeholders. It also highlights the need for emerging GPs to develop unique value propositions and to learn continuously from market dynamics and operational challenges.
Lessons Learned from Isomer’s 10-Year Journey:
Embracing a no-blame culture that encourages learning from mistakes
Utilizing detailed investment memoranda to assess performance
Maintaining transparency and consistent communication with LPs
Balancing optimism with disciplined financial decision-making
Best Practices for Emerging GPs:
Develop a clear and unique value proposition
Establish rigorous internal processes and realistic performance targets
Prioritize transparency in LP communications and reporting
Focus on continuous learning and adapting to market changes
Build long-term, trust-based relationships with investors
EUVC Summit - Charting the path for European Progress
The EUVC Summit, themed "Charting the Path for European Progress," is designed as a specialized event that gathers key industry players to discuss the transformative trends and challenges in European venture capital. The summit aims to provide a platform where passionate stakeholders share insights on critical topics such as unlocking pension capital, nurturing emerging managers, and driving sustainable growth in the ecosystem. The event aspires to create a narrative highlighting the region’s unique strengths and forward-thinking approach in the venture landscape by focusing on European role models and success stories.
Chris is particularly excited about the summit because it represents a tangible step towards fostering a mature, self-sustaining European venture ecosystem. He values the opportunity to engage in deep, meaningful discussions beyond traditional conference formats, emphasizing interactive dialogues and collaborative problem-solving. For Chris, the EUVC Summit celebrates achievements and sparks new initiatives that can propel Europe to stand confidently in the global market.
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