Europe doesn't need another public VC

If something is truly market-conform, it will do what the market already does

Let’s stay with the coalition agreement for another quick read. This morning, the Dutch Financial Times headlined: “Economists divided over the coalition’s proposed investment institution: “what does it add?”

The newly formed Dutch coalition wants a new national investment institution with €3–5 billion in starting capital. The intention is understandable: strengthen the Dutch capital market, improve long-term earnings capacity, and help strategic sectors scale.

But the proposal contains a tension you can’t solve with wording. If the institution is required to invest “on market terms” and deliver “market-rate returns”, then by definition it will mostly do what the market already does. And if it’s also supposed to be “additional” (not crowding out private investors), the investable universe becomes even narrower.

A high-potential company on a breakout trajectory typically doesn’t want — or need — a government institution on its cap table. Not because public capital is “bad,” but because these companies optimize for speed, pattern recognition, and operator-led support. They want professional managers with deep experience building category-defining companies. If those managers are partly backed by public capital behind the scenes, most founders won’t care, what matters is the quality of the partner, not the logo on their shareholder list.

For years in Europe we’ve said the same thing: we don’t have enough growth capital. But the answer isn’t “growth capital” in the form of government entities trying to behave like private investors. The answer is to enable Europe’s best managers to raise funds at true scale. Hundreds of millions, and eventually billions, so they can compete globally on equal footing. If firms like Andreessen Horowitz can raise multi-billion dollar vehicles from private markets, the ambition in Europe shouldn’t be to create a bigger public investor. It should be to create the conditions for European alternatives to reach similar scale, with world-class governance, clear incentives, and a track record that pulls private capital in.

There is a better way to do this.

The state shouldn’t try to be another quasi-VC. Its comparative advantage is absorbing specific risks that private markets won’t take, and doing so in a way that unlocks much larger pools of private capital.

If the goal is genuinely to strengthen innovation and earning capacity, then design the institution around the real gaps: guarantees, first-loss structures, and other instruments that change the risk profile so private capital can step in at scale.

And when equity is the right tool, professionalize it fully: allocate capital through experienced managers with strong track records, clear mandates, transparent governance with skin-in-the-game, and measurable outcomes, including an explicit approach to VC fund investments across early-stage and growth, rather than trying to pick winners from within a politicized institution.