Why European Startups Struggle to Woo Investors

Raising capital for a biotech startup in Europe is a bit like trying to sell an avant-garde art piece to a minimalist. The innovation is there, the brilliance undeniable, but the reception feels tepid. Meanwhile, in the U.S., biotech founders routinely raise millions with little more than a pitch deck and an elevator pitch that promises to "revolutionize medicine."

Europe isn’t short on talent, patents, or ambition—it has more biotech patents per capita than the U.S. and some of the best research institutions in the world. Yet the path from promising discovery to scalable startup feels like wading through molasses. So, why is it so much harder to raise capital in Europe?

A Tale of Two Investment Cultures

The first culprit is cultural. American investors have an almost religious belief in risk-taking. Venture capitalists are celebrated for backing moonshots, knowing full well that nine out of ten bets may fail—but the tenth could be a unicorn. In Europe, investors tend to prioritize steady returns and incremental progress, treating biotech like a cautious chess game rather than a high-stakes poker hand.

Take the average biotech pitch. In the U.S., a bold idea with preliminary data might secure millions in seed funding, propelled by the mantra of "first to market." In Europe, the same pitch might prompt a battery of questions: "Where’s your proof of concept? Your five-year plan? Your path to profitability?" By the time these questions are answered, the U.S. competitor has already moved into clinical trials.

The Bureaucratic Ball and Chain

Then there’s bureaucracy. Europe’s love of structure and regulation might make for excellent governance, but it’s a nightmare for startups. Public funding programs like Horizon Europe provide critical lifelines to early-stage companies, but the process to access these funds is slow, labyrinthine, and comes with a hefty administrative burden.

Imagine a founder in Berlin with a revolutionary idea for gene therapy. Instead of pitching to investors, they spend months filling out grant applications, preparing detailed progress reports, and waiting for approval. In Boston, their U.S. counterpart has already secured private funding, hired a team, and is courting Big Pharma for a partnership.

Public grants also come with strings attached. Founders often feel they’re working for their funding agencies rather than their businesses, with rigid milestones and reporting requirements that stifle agility.

Fragmentation Frustration

The European Union may aspire to unity, but for biotech startups, the continent often feels like a jigsaw puzzle of regulatory hurdles and market peculiarities. While U.S. companies can scale across a single, massive market, European startups must navigate a maze of national rules, languages, and healthcare systems.

Even patents—an area where Europe excels—don’t translate easily into commercial success. Filing a patent in Europe might signal innovation, but commercializing it across borders requires resources, time, and expertise that many startups simply don’t have.

The Comfort—and Curse—of Public Funding

Europe’s reliance on public money is both a blessing and a curse. Programs like Horizon Europe and national initiatives in Germany, France, and elsewhere have kept many startups alive. But public funding can crowd out private investment. Why should venture capitalists risk their money when governments are footing the bill?

The result is a biotech ecosystem heavily reliant on public grants, with fewer private investors willing to fund high-risk, high-reward ventures. This creates a bottleneck for startups trying to move beyond early-stage research and into the expensive world of clinical trials.

A Cultural Clash: Failure as a Badge of Honor—or Shame

In the U.S., failure is almost a rite of passage for entrepreneurs. A failed startup is seen as a learning experience, a stepping stone to eventual success. In Europe, failure is often viewed with suspicion, making founders and investors alike more cautious.

This cultural conservatism dampens the kind of bold experimentation that fuels biotech innovation. Startups aiming for transformative breakthroughs often struggle to find investors willing to take a leap of faith, leaving them stuck in a cycle of incremental progress that rarely attracts the big bucks.

What Needs to Change

Europe doesn’t lack the brains or the brilliance—it lacks the ecosystem to match its potential. Here’s how the continent can level the playing field:

1. Embrace Risk: Investors need to adopt a more American mindset, understanding that failure is part of the innovation process. Big bets on biotech moonshots could yield enormous returns—not just in profits but in life-saving therapies.
2. Streamline Bureaucracy: Public funding programs must become more efficient. Faster approvals, fewer reporting requirements, and greater flexibility would help startups focus on scaling rather than form-filling.
3. Unify Markets: A truly pan-European regulatory framework for biotech would make scaling across borders simpler and more appealing to investors.
4. Promote Entrepreneurial Culture: Celebrating entrepreneurial successes—and normalizing failure—could inspire a new generation of founders and investors to take bold risks.

Final Thoughts: A Missed Opportunity?

Europe is brimming with potential. Its universities produce groundbreaking research, its biotech patents rival those of the U.S., and its talent pool is second to none. But without a culture that embraces risk, simplifies funding, and encourages boldness, Europe’s startups will continue to lag behind their American counterparts.

Biotech doesn’t wait. While Europe’s founders navigate red tape, their U.S. peers are raising millions, running trials, and capturing markets. It’s time for Europe to stop being the cautious observer and start becoming the bold competitor. Because in biotech, playing it safe is the riskiest move of all.