European companies are increasingly seeking new methods to attract investment beyond the continent’s traditional capital markets to support expansion and enhance global competitiveness. Research by the European Commission revealed that from 2016 to 2024, venture capital funding in the European Union was around 80 percent lower than in the United States, underscoring a significant funding gap for larger financing rounds needed to scale businesses.

Despite Europe's substantial savings, its investment culture is considered weaker compared to that of the US, leading many companies to look across the Atlantic for higher valuations and capital. In September 2024, former Italian Prime Minister Mario Draghi called for a fundamental reform in EU funding mechanisms, warning that without increased investment—backed by both private and public sectors—and improved productivity, Europe risks widening the gap with the US and China.

Against this backdrop, legal and financial advisers are supporting companies in Europe and the UK as they explore alternative funding avenues amidst quiet public markets. In the UK, for example, a private markets platform called Pisces enables limited secondary share sales in private companies, providing liquidity for employees holding shares or early-stage investors, according to Julian Morse, co-chief executive of investment bank Cavendish. He noted that while regulatory reforms have made public listings more attractive, the critical challenge remains attracting sufficient capital, something regulations alone cannot ensure.

International investment remains vital for many European businesses, particularly those involved in sustainable infrastructure. In Ireland, the government is encouraging private capital to fill funding gaps for major low-carbon projects that public funds cannot cover. Mark White, chair of law firm McCann Fitzgerald, coordinated a partnership between Keyridge, one of Ireland’s largest asset managers, and Canadian private equity group North Leaf Capital, which collectively raised €200 million alongside an additional €140 million from Ireland’s sovereign wealth fund. The resulting investment vehicle, TirNua, targets renewable energy and clean transportation projects and is structured to facilitate international investment, recognizing that domestic sources alone are insufficient.

At the EU level, efforts continue to unify capital markets and foster greater domestic investment by retail and pension funds, aiming to enhance the competitiveness of European companies. However, disagreements persist among member states over market integration details, with some concerned about losing control over national markets. Still, Ireland remains optimistic about reaching an agreement to deepen Europe’s capital markets by the end of 2025.

The challenge of securing higher valuations within Europe is exemplified by IQM Quantum Computers, a Finnish company advised by Eino Järnroos, a partner at law firm Borenius in Helsinki. Järnroos explained that Finnish investors tend to favor companies with stable dividend payouts, unlike US investors who commonly back high-growth firms from the outset. To reconcile its desire for a strong European identity with the need to compete against American peers, IQM opted for a dual listing, debuting its shares on both the Helsinki and New York stock exchanges in July. This approach allows the company to access the premium valuations available in US markets while maintaining European market presence—an increasingly common strategy as companies seek alternatives to traditional initial public offerings. According to the Association for Financial Markets in Europe, private markets are playing a growing role in financing, contributing to a new funding landscape across the continent.

Overall, while European capital markets face structural challenges, companies and advisers are innovating with new funding models aimed at bridging financing gaps, supporting sustainable growth, and enhancing Europe's global competitiveness.