Europe often sees a promising technology company acquired by a buyer from another country (usually the US). We most recently saw this with the acquisition by Nvidia of Hugging Face. Cure a wailing and gashing of teeth about what has been lost! But this periodical angst tends to avoid the root causes of the event.
A successful cross-border acquisition can reward founders and employees, return capital to investors, and give a new generation the confidence to build again. The OECD describes this process as ‘entrepreneurial recycling’. An exit can release capital, skills and relationships that are then invested in new companies. In technology circles, the people emerging from a successful company are sometimes called a startup “mafia.” The idea is that one successful company can become a school for many future company builders. We are deeply familiar with this process, given it emerged from Silicon Valley.
That said, the positive effect is not automatic, and there are instances where an acquisition removes capability, for example by closing research programmes, moving talent away, or preventing knowledge from circulating. The right question is therefore not simply whether ownership crossed a border, but whether the transaction removed capability or helped it compound, especially locally.
European Commission research describes two valleys of death; one between research and a marketable product, another when a young company tries to scale. Its 2025 strategy reported that only 8 per cent of global scaleups were based in Europe, while nearly 30 per cent of European unicorns founded between 2008 and 2021 had relocated outside the EU.
These figures describe a genuine weakness in the ecosystem. Yet Europe’s challenge cannot be explained by a simple lack of capital. European venture investment reached almost €20 billion in 2025, around 20 per cent above the previous five-year average. But at the same time, 62 per cent of EU firms report that the European market remains fragmented for their main product or service. Plus ca change.
Ironically, Europe already possesses many of the ingredients of technological power with strong research institutions, ambitious founders, industrial companies, investors and growing public commitment. What it lacks is a reliable way to connect those ingredients.
Sovereignty is the ability to choose
Crucially, we must remember that technological sovereignty should not, and does not, mean technological isolation. No serious deeptech company can be built within one national supply chain or one customer market. European founders will continue to need investors, equipment, talent and commercial relationships from the United States, Asia and elsewhere. Apart from being impractical, preventing them from entering global markets in the name of sovereignty would make them weaker, not stronger.
The Finnish quantum company IQM is a good example of this. It raised more than $300 million in a Series B round led by a US venture firm, with European pension funds, public institutions and strategic investors also participating. At the same time, it continued investing in chip fabrication and production capacity in Finland and supplying systems for European research infrastructure.
This is just one example of how global capital helped reinforce capability in Europe rather than remove it. This changes how we should evaluate financing and company-building partnerships in that a financing round should not be judged only by the nationality of its participants and an acquisition should not be judged only by the headquarters of the buyer. Both should be assessed by whether they increase the likelihood that more globally competitive companies will be built.
Build the syndicate around the bottleneck
The argument between institutional venture capital and corporate venture capital starts in the wrong place. Investor labels conceal considerable variation, so the better question becomes, ‘what combination of capital, judgement, capabilities and relationships gives this company the best probability of building independently and scaling globally?’
The bottleneck test: start with the next constraint that matters, whether technical proof, production, a reference customer, a senior hire or further financing. The right investor is the one whose contribution matches that bottleneck.
The contribution test: strategic value should be expressed through capability, not control. Expertise, infrastructure and customer access can strengthen a company. Exclusivity, excessive governance rights or roadmap influence can narrow its options.
The independence test: a strategic investment should never become an undeclared option to buy the company. Founders must remain free to work with competitors, raise future capital and pursue the strongest market.
The activation test: Access is not activation. A promise of experts, factories or customers has little value without a named owner, a clear question, a timetable and a route to the next decision.
The continuity and evidence test: corporate strategies change, sponsors leave and investment mandates are revised. Venture funds also face reserve limits and fundraising cycles. Founders should understand what happens when the original rationale changes, then judge the relationship by evidence. Did a decision change? Did resources move? Was the technology adopted? Did the company become more capable, financeable or resilient?
Better collaboration between institutional VCs and corporate investors is a fundamental part of a successful innovation stack. While it cannot, however, remove Europe's fragmentation, it can make the industrial and financial assets Europe already possesses more useful to founders.
Plus, it’s a subtler and more workable approach to the issue than simplistic debates over sovereignty and exits.
Nicolas Sauvage is the founder and president of TDK Ventures, the global corporate venture capital arm of TDK Corporation.