Key Takeaways
- • Hans-Jürgen Schmitz, co-founder of Mangrove Capital Partners, says fundraising has become substantially harder over the past 25 years, moving from a two-page investor list to a structured, due-diligence-driven process.
- • Bank and insurance share of European venture capital fell from roughly 35% in 2005 to 5% today, while family offices rose from about 10% to 20%.
- • Some major investors now only back managers capable of regularly raising €50m, €100m or €150m, with a demonstrated track record.
- • According to Schmitz, first-time fund launches fell 80% between 2021 and 2025 in the US and Europe, and raising a first fund is rated at least 4 on a 1-to-5 difficulty scale.
- • Public institutions account for 35-40% of European venture capital versus about 4% in the United States, and the EU's Savings and Investment Union is seeking to mobilise private savings.
Summary
In an interview published by Paperjam in its issue 272 coverage of Luxembourg's private equity ecosystem, Hans-Jürgen Schmitz, co-founder of Mangrove Capital Partners, described a fundamental change in how venture capital is raised over the past 25 years. In 2000, European venture capital was still nascent, and a team plus a coherent investment thesis was sufficient to attract capital. Today investors have a far wider choice of managers and place greater weight on team composition, experience and the ability to source, select and support companies.
Schmitz pointed to regulatory change as a central factor, noting that compliance was virtually non-existent at the time and that requirements have risen considerably since the AIFMD took effect in 2014, following the 2008 financial crisis, with relatively little differentiation between asset classes. He said fundraising now requires groundwork 12, 18 or even 24 months before a round, including identifying likely investors and building relationships, and that private capital has become an asset class in its own right with structured allocation programmes. Fund managers must also conduct their own due diligence on investors.
The capital base has shifted considerably. According to Schmitz, banks and insurers accounted for around 35% of European venture capital in 2005 but about 5% today, while family offices rose from roughly 10% to 20%. Sovereign wealth funds now hold a significant share globally, and the Middle East has become a deep pool of capital, with all major US funds having opened offices in Abu Dhabi, Riyadh or Dubai. Public institutions make up 35-40% of the European industry versus around 4% in the US, and European pension funds still invest little in venture capital. The EU's Savings and Investment Union and a wider European debate on mobilising savings were noted.
Access to capital has tightened. Some major investors now only consider firms able to raise €50m, €100m or €150m regularly, with diversified strategies spanning early and growth stages, multidisciplinary teams and a strong performance record. Since the Covid pandemic, liquidity and capital return have become key criteria, and Schmitz said first-time funds have been hit hardest: between 2021 and 2025 their number fell 80% in both the US and Europe, largely because they cannot demonstrate a track record.
On accessibility for private investors, Schmitz said the amount invested in alternative assets has risen tenfold over 25 years and that major players are launching semi-liquid products. However, private equity and venture capital funds are typically locked up for at least ten years, so semi-liquid retail products tend to favour private credit or property, and retail investors remain largely absent from venture capital, where family offices are the main exception.
Schmitz pointed to regulatory change as a central factor, noting that compliance was virtually non-existent at the time and that requirements have risen considerably since the AIFMD took effect in 2014, following the 2008 financial crisis, with relatively little differentiation between asset classes. He said fundraising now requires groundwork 12, 18 or even 24 months before a round, including identifying likely investors and building relationships, and that private capital has become an asset class in its own right with structured allocation programmes. Fund managers must also conduct their own due diligence on investors.
The capital base has shifted considerably. According to Schmitz, banks and insurers accounted for around 35% of European venture capital in 2005 but about 5% today, while family offices rose from roughly 10% to 20%. Sovereign wealth funds now hold a significant share globally, and the Middle East has become a deep pool of capital, with all major US funds having opened offices in Abu Dhabi, Riyadh or Dubai. Public institutions make up 35-40% of the European industry versus around 4% in the US, and European pension funds still invest little in venture capital. The EU's Savings and Investment Union and a wider European debate on mobilising savings were noted.
Access to capital has tightened. Some major investors now only consider firms able to raise €50m, €100m or €150m regularly, with diversified strategies spanning early and growth stages, multidisciplinary teams and a strong performance record. Since the Covid pandemic, liquidity and capital return have become key criteria, and Schmitz said first-time funds have been hit hardest: between 2021 and 2025 their number fell 80% in both the US and Europe, largely because they cannot demonstrate a track record.
On accessibility for private investors, Schmitz said the amount invested in alternative assets has risen tenfold over 25 years and that major players are launching semi-liquid products. However, private equity and venture capital funds are typically locked up for at least ten years, so semi-liquid retail products tend to favour private credit or property, and retail investors remain largely absent from venture capital, where family offices are the main exception.
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