European VC Assets to Plunge by $120 Billion by 2030 as Private Equity Climbs

European venture capital assets are projected to contract sharply over the next five years, dropping from $431.4 billion at the end of 2025 to $311.4 billion by 2030. A new analysis by PitchBook reveals a stark divergence in the region's private capital markets, with private equity expected to steadily expand while the startup ecosystem faces a prolonged liquidity drought.

This forecast signals a critical shift for European founders, limited partners (LPs), and institutional investors. The post-pandemic funding boom has officially given way to a highly selective environment where capital deployment is concentrated, and returns are increasingly falling below historical averages.

The projected decline in venture capital assets under management (AUM) stems from persistently weak fundraising, with both the total capital raised and the number of active funds falling annually since their 2022 peak. Even in PitchBook's most optimistic scenario, VC AUM would only reach $406.2 billion by 2030, while the worst-case projection models a collapse to $243.9 billion.

The sector's recent volatility underscores this downward trajectory. VC AUM previously surged to $422.5 billion in 2021 amid record deal activity before pulling back and briefly hitting a new high in late 2025. However, inconsistent deal flow, subdued exits, and limited cash distributions to LPs have created severe headwinds. Many European startups are now facing slower valuation growth, internal write-downs, or are actively withholding pricing details from the public.

While investments in artificial intelligence have accelerated sharply over the past 18 months, this concentration introduces high variability risks. Major AI-driven exits remain elusive in Europe compared to the US market, leaving the future performance of these heavy investments highly uncertain.

In stark contrast to the VC ecosystem, European private equity (PE) is positioned for continued, moderate expansion. PitchBook's base case anticipates PE AUM growing from $1.5 trillion in 2025 to $1.7 trillion by 2030, representing a 3% compound annual growth rate (CAGR). This steady climb mirrors the asset class's historical resilience, having expanded consistently from $534.6 billion in 2015.

PE activity has proven significantly more stable than venture capital, with deal values hitting records in 2025 and capital raising achieving new highs between 2023 and 2024. Depending on fundraising and performance trends, downside and upside scenarios place 2030 PE AUM between $1.5 trillion and $2.0 trillion.

This growth is expected to be supported by evolving fund structures, including secondaries, evergreen funds, and expanded access for pension funds, sovereign wealth funds, and retail investors. While geopolitical tensions and interest rate volatility pose risks due to PE's reliance on leverage, the sector's ability to manage margins amid inflation keeps its overall trajectory positive.

Geographically, the United Kingdom is forecast to maintain its absolute dominance over the European private capital landscape. By 2030, the UK is expected to represent 31.5% of European VC AUM (approximately $137 billion) and 38.8% of PE AUM (approximately $673 billion).

Beyond the UK, France, Germany, the Netherlands, and Israel will remain the most significant contributors to the venture capital ecosystem. Meanwhile, Luxembourg, Sweden, France, and Switzerland will feature prominently in the private equity space, bolstered by favorable tax regimes and established fund domiciliation practices.

The PitchBook data highlights a structural flaw in the European tech ecosystem: the inability to generate massive liquidity events for AI startups. While European funds are pouring capital into AI to keep pace with the US, the lack of a robust IPO market or aggressive domestic tech acquirers means these high valuations remain trapped entirely on paper.

If European regulators and stock exchanges do not create more viable, attractive exit pathways, LPs will increasingly redirect their capital to US funds where liquidity is proven. This dynamic threatens to accelerate the projected $120 billion contraction in European VC assets, potentially starving the next generation of European innovation of early-stage capital.