Welcome back to another episode of the EUVC Podcast, where we bring together Europe’s venture family to share the stories, insights, and lessons that drive our ecosystem forward.
Today we dive into one of the most under-discussed — yet increasingly important — topics in European venture: Opportunity Funds.
Joining Andreas Munk Holm is Lea Strumberger, Senior Investment Manager at KfW Capital, one of Europe’s largest and most mission-driven LPs. KfW Capital co-operates several modules of Germany’s €10B Future Fund (Zukunftsfonds) and deploys into VC funds to strengthen Europe’s late-stage capital base.
Within that framework, KfW Capital has launched an Opportunity Fund facility to back managers deploying Series B+ capital — often into their own breakouts — with a structure and governance playbook that preserves alignment and avoids “continuation-vehicle rescue” dynamics. Public examples of European Opportunity strategies include Notion Capital’s Opportunities funds, built alongside its core franchise.
Here’s what’s covered
00:17 — Mandate & why Series B+: Europe needs domestic late-stage capital
04:39 — Two OF archetypes: inside-only vs blended
08:15 — How KfW diligences emergent managers launching OFs
13:19 — Why a third-party lead (≥25%) matters
18:53 — Terms that matter: fees, carry, GP commit, duration
25:30 — GP commit reality for second-timers
33:19 — Governance: allocation policy, LPAC, down-rounds
36:10 — Hurdle rates: 6–8% standard, not the battleground
37:55 — Market pulse: ~10 OFs/year cross KfW’s desk
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TL;DR (what “good” looks like)
Two archetypes:
Inside-only: 100% follow-ons into existing winners.
Blended: majority inside + up to ~40% external (only if the GP has true late-stage capability).
External lead ≥25%: Ensures market validation and prevents in-house price-setting.
Shorter fund lives: 7–8 years (+1/+1). You’re entering later, so exits should come faster.
Economics: fees ~1–1.2%, carry <20%. Keep flagship funds as the core incentive engine.
GP commit: ~1% for Opportunity Funds; ~2% for flagship funds, with flexibility for emerging managers.
Governance: Allocation rules between flagship vs. OF, LPAC engagement on conflicts, and documentation that holds up in tough cycles.
Inside the KfW Capital framework
Mandate & Market Context
KfW Capital invests in German & European VC funds to expand the local supply of venture and growth capital. The Future Fund introduces targeted mechanisms like the GFF-EIF Growth Facility, with a clear mission: European money backing European late-stage champions.
What KfW Will Back (and Why)
Inside-only OFs work when the flagship portfolio is large enough to avoid artificial deployment pressure.
Blended OFs are valid when the GP upgrades with late-stage partners, sourcing, and pacing discipline.
SPVs vs OFs: many LPs accept SPVs; KfW cannot, preferring structured, repeatable OF vehicles.
Continuation funds: require third-party price discovery; edge cases must go through the LPAC.
Terms & Alignment
External lead ≥25% to ensure pricing discipline.
Down-rounds: Not banned — context matters, especially post-2021 vintages. Must go to LPAC.
Fees/carry: Lower than flagship; flagship must remain the incentive engine.
Duration: 7–8 years (+1/+1).
A Practical Playbook
For GPs Considering an Opportunity Fund
Choose your archetype deliberately — deep portfolio = inside-only; externals (≤40%) demand growth expertise.
Codify allocation & conflicts — write down flagship vs OF exposure rules.
Follow, don’t lead — rely on third-party pricing to avoid conflicts.
Right-size economics — shorter life, lower fees/carry, sustainable GP commit.
Anchor in policy — tie the OF strategy to Europe’s growth capital gap and the Future Fund’s mission.
For LPs Diligencing an OF
Start with portfolio look-through — don’t fund manufactured deployment.
Pressure-test externals — check attribution, sourcing, pacing.
Hard-code governance — external lead threshold, down-round policy, LPAC cadence.
Key Takeaways
Opportunity Funds ≠ continuation vehicles. External leads keep pricing real.
Inside-only OFs are best for deep portfolios; blended OFs demand late-stage muscle.
Alignment is systemic: duration, fees, carry, GP commit, and governance must fit together.
Europe’s policy backdrop matters. The Future Fund is about closing the growth gap with local capital — OFs should be designed to serve that mission.
🌍 Takeaways for Founders & VCs
GPs: only launch an OF if your portfolio is deep enough — or if you can credibly source late-stage externals.
LPs: diligence starts with portfolio look-through and ends with governance discipline.
Both: Europe needs more European growth capital — structure OFs to deliver that.
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