Welcome back to another episode of Upside at the EUVC Podcast, where Dan Bowyer, Mads Jensen of SuperSeed and this week’s special guest Joe Knowles from Smedvig Ventures unpack what’s happening in European venture capital.
This week: Are we doomed to lag the US in wealth creation or is Europe finally closing the gap? Why a record $100B of M&A matters for exits and recycling capital, and how founders should think about selling vs going for gold. Plus: Porsche & Deutsche Telekom anchoring a €500M defence fund as Germany drops its taboos, the scramble for cheap energy and battery breakthroughs, and what GPT-5, Perplexity, and Nvidia tariffs tell us about Europe’s place in the AI race.
Here’s what’s covered:
00:48 US vs Europe in Wealth Creation: Compounders, unicorns, and Europe’s capital efficiency.
09:07 Late-Stage Funding Gap: Why pensions and IPO markets hold Europe back.
17:36 M&A is Back: Google’s $32B Wiz deal, Windsurf drama, and Europe’s “second tier” opportunity.
25:52 Why Exits Matter: Recycling capital and the venture flywheel.
27:09 Defence Tech Goes Mainstream: Porsche, DT, EIF and Germany’s cultural shift.
36:18 The Ethics Question: Dual use, deterrence, and uncomfortable truths.
41:22 Energy Corner: Lithium recycling, sodium-ion batteries, and Europe’s 4x US energy costs.
46:44 AI Needs Power: Grid bottlenecks, red tape, and planning reform urgency.
51:10 GPT-5 Launch: Unified model, user backlash, and coding benchmarks.
54:37 Perplexity vs Chrome: PR stunt or regulatory opening?
58:32 Chip Wars: Nvidia tariffs, Huawei delays, and why Europe needs Chips Act 2.0.
1:05:59 Shoutout to Italy: Record €655M H1 startup funding.
🎧 Listen on Apple or Spotify — or queue it for later with chapters ready to go.
✍️ Show Notes
Europe vs US in Wealth Creation
Sharma’s article: 248 global compounders outside the US, but only ~50 in Europe. VC in Europe growing 5x faster, startups up from 8k → 35k in a decade.
Mads: “The US has doubled Europe’s GDP per capita in 15 years. Market cap concentration matters.”
Joe: “US won the internet race — hyperscalers skew perception. Europe’s missing piece is late-stage funding and exit markets.”
Why it matters: Europe has talent and capital efficiency, but pensions and IPO structures are blocking scale.
M&A’s $100B Rebound
H1 2025: $100B in M&A (+155% YoY). Google–Wiz $32B; Windsurf split between Google and OpenAI; ServiceNow, Xero, Clearlake also buying.
Mads: Codegen, security, and vertical AI are the three big themes.
Joe: “The second-tier deals — like Cognigy or Klaus — are the real European opportunity.”
Why it matters: Exits recycle capital, keep the venture flywheel turning, and decide whether founders sell early or go for gold.
Defence Tech’s Mainstream Shift
Porsche & DT anchor €500M defence fund; EIF and KfW soften rules; Lakestar raising €250M.
Mads: “€500M isn’t much, but culturally this is huge. German corporates backing weapons startups is a watershed.”
Joe: “We’ve avoided defence — selling to governments is hard. But dual use and resilience layers are investable.”
Ethics debate: Dan wary as a parent, Joe conflicted, Mads pragmatic: “Sometimes the best defence is offence.”
Why it matters: Europe is dropping its 70-year defence taboos. Dual use + resilience layers will attract capital.
Energy as Europe’s Competitive Lever
Headlines: 97% lithium recycling, CATL sodium-ion breakthrough ($10/kWh), fusion steel, 250 battery plants planned.
Mads: “UK energy is 4x US. We need gas now, nuclear in 10 years, storage and grid reform immediately.”
Joe: “Fusion and SMRs are long-term. Storage breakthroughs like sodium-ion could be Europe’s short-term unlock.”
Why it matters: Cheap energy is existential for Europe’s competitiveness in AI and industry.
AI Corner
GPT-5: Unified reasoning + speed, free for 700M users. User backlash but coding benchmarks strong.
Perplexity & Chrome: PR stunt or regulatory bet? Amazon quietly backing Anthropic + Perplexity.
Chip Wars: Nvidia tariffs, Huawei chips underperform, Europe stuck with outdated fabs.
Mads: “Europe needs Chips Act 2.0. Use ASML leverage to strike quid-pro-quo deals.”
Why it matters: AI race = compute + power. Without decisive moves, Europe risks being left behind.
Shoutout: Italy’s Surge
Italian startups raised €655M in H1 2025, already beating 2020’s full-year record. Signs of green shoots across Europe.
💡 One-liner takeaway:
From M&A’s return to Europe’s defence and energy awakening, the continent’s challenge is clear — action, ambition, and the capital to compete will decide its place in the AI era.
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