What does Trump 2.0 mean for European VCs?
by David Cruz e Silva, an operator turned angel LP and founder of eu.vc
TL;DR – Key Takeaways
Trade tensions between the U.S. and the EU could disrupt transatlantic investments, impacting LPs more than VCs.
The U.S. is dialing back on ESG, sustainability, and green energy, leaving Europe to lead—but with significant challenges.
Defense tech could finally get a long-overdue investment push in Europe, driven by NATO pressure and geopolitical rhetoric.
AI is heading into a more fragmented world, with supply chains, chip access, and regulatory divergence making cross-border collaboration trickier.
Crypto regulation in the U.S. is getting looser, while Europe is tightening the screws, pushing founders toward the American market.
Trump Is Back—Should European VCs Be Worried?
Trump is back, and the shockwaves are already hitting global markets. While most eyes are on his domestic shake-ups, European VCs can’t afford to sit this one out. Trade, deregulation, AI, defense, crypto—his policies will shift capital flows, change how LPs think, and force Europe to make some tough calls.
So, let’s break it down. What does Trump 2.0 mean for European VCs?
Trade Tensions: The Next Chapter in U.S.-EU Drama
We all know Trump’s not one to keep quiet about Europe. His love for calling out European regulators has become almost a hobby. If this escalates into tariffs, lawsuits, or trade restrictions, European startups looking to the U.S. for expansion might feel like they’ve just been handed a “Sorry, try again” card.
The real kicker, though? The potential capital flow shift. "America First" could lure European LPs into U.S. markets, like moths to a flame. VCs may hold steady, but if LPs start flocking to U.S. markets for what they think is a "safer bet," things could get tricky.
📌 For VCs: Expanding into the U.S. might get trickier for your portfolio companies. But the real concern? Whether your LPs start chasing easier money across the Atlantic.
Climate Tech, ESG, and the Sustainability Divide
Feeling hot? Buckle up, because the heat is about to turn up even more. When it comes to energy, Trump’s policies are more about turning up the heat on fossil fuels than the climate conversation. With the U.S. stepping back from ESG initiatives, Europe is set to take the reins on sustainability efforts—but that comes with a few challenges.
ESG investors: European funds with strict ESG mandates will find it harder to co-invest in the U.S., widening the gulf between the two markets.
Climate tech startups: With U.S. investors shifting back toward fossil fuels, European startups reliant on American funding or expansion may feel the squeeze.
European leadership? Sure, this could push Europe to take the lead, but fragmented national policies make scaling climate initiatives a bureaucratic nightmare.
📌 For VCs: If your climate tech bets depend on U.S. capital or partnerships, maybe it’s time for a rethink. Can Europe really step up to fill the void? Or will it become the "best supporting actor" in the global green tech story?
Defense & AI: Europe’s Call to Action
Let’s talk defense. Trump’s NATO demands might be just the push European governments need to actually invest in defense tech. But his rhetoric itself matters just as much as policy. He’s talking a lot about national security, war, and even the Panama Canal—which means that European defense authorities and investors won’t be able to ignore this moment.
And while NATO gets a wake-up call, AI is becoming more geopolitically fragmented and a hot mess everyone loves to talk about:
The U.S. is loosening AI safety regulations, aiming to race ahead and disregarding any potential consequences.
Trump’s tightened export bans on AI chips to China could shake up supply chains worldwide and impact European startups reliant on U.S. partnerships.
Now, here’s the million-dollar question: Will Europe step up to the challenge or keep waiting for the U.S. to hand them a participation trophy in defense and AI? It’s not just about having great tech—it’s about turning that tech into serious investment; but so far, dedicated funds in this space haven’t fully convinced investors.
📌 For VCs: The demand for European defense tech is growing, but where’s the conviction? The market has been waiting for a strong, vertically focused defense-tech fund in Europe—will it emerge this time?
Final Thoughts: What’s Next for European VCs?
Trump 2.0 isn’t just an American issue. It’s a global game changer—and European VCs need to take a good look at the shifting landscape.
On one hand, Trump’s policies might open up new opportunities: defense tech, AI acceleration, and deregulated crypto markets could ignite fresh investments. On the other hand, they might make life harder: trade wars, ESG divergence, and capital flow shifts could make it tougher for European startups to scale globally.
The real risk? Not that European VCs will chase after U.S. deals, but that European LPs quietly reallocate capital elsewhere. And that’s the kind of shift that could change the entire game.
Four years of Trump might mean four years of recalibrating. European investors will need to double down on what makes this region strong—long-term vision, sustainable innovation, and bold bets. Because if they don’t, someone else might just swoop in and take their place.
So, what do you think? Will Europe step up to the plate and seize these opportunities, or will it get caught in the crossfire of global shifts? The clock’s ticking.
