A Once in a Generation Opportunity?

Challenges and Opportunities for Entrepreneurs in a Changing Market

Insight and keynote by GP Bullhound, article by Ventech

During our last Ventech Portfolio Summit, Manish Madvhani, Managing Partner and co-founder of GP Bullhound*, provided us with deep insights on the European tech market.

Let’s take a look at the key takeaways!

A Market Under Pressure, Yet Buoyed by Optimism

The market has faced turbulence in recent years: a 50% drop in funding between 2022 and 2024, hundreds of thousands of layoffs, and a $60 billion gap between venture capital investments and returns. This context has left many funds paralyzed, directly impacting entrepreneurs seeking funding.

Despite this, optimism remains.

Why? Positive signals are emerging. The Nasdaq has risen by 30%, IPOs are cautiously resuming, and major private equity players are ramping up their activities. These dynamics are reshaping the landscape for growth companies.

IPOs and Private Equity: Two Complementary Paths

Historically, IPOs were the gold standard for tech companies. Yet, with 400 companies valued at over a billion dollars and a saturated market, it would take 20 years to clear the backlog. In this context, acquisitions and private equity funds have stepped in.

Major players like KKR and Blackstone are now executing a record number of transactions, some exceeding $500 million. These mega-funds provide businesses with a credible alternative to IPOs, even for those still in their growth phase.

Artificial Intelligence: An Accelerating Revolution

Artificial intelligence stands as the defining transformation of our time. In Europe, one-third of funds raised in recent months have been allocated to AI-focused companies. These companies are achieving $30 million in revenue three times faster than traditional firms, with exponential valuation growth.

For entrepreneurs, this means integrating a solid AI strategy is crucial — both to harness its opportunities and mitigate its threats. Companies leveraging AI for efficiency and scalability are already dominating their markets.

Building for Success: The Unicorn Example

Reaching unicorn status requires a clear vision and precise strategic steps. On average, it takes seven years, five funding rounds, and a team of 500 people. Entrepreneurs must also plan for exits. The best companies prepare multiple scenarios from the outset: IPOs, acquisitions, or strategic partnerships.

Examples like Revolut and Spotify highlight the importance of perseverance and innovation. Revolut built its infrastructure from the ground up to outperform traditional banks. Spotify pursued an ambitious vision and bold negotiations to transform the music industry.

Tips for Entrepreneurs

1. Diversify your options: Don’t rely solely on IPOs. Explore opportunities through acquisitions and private equity.
2. Be realistic about valuations: Overvaluations can deter investors and complicate exits.
3. Adopt an AI strategy: Identify how AI can transform your business and embed it into your roadmap.
4. Foster strategic partnerships: Build strong relationships with key players in your ecosystem early on.

The market remains demanding but is full of opportunities for those who can adapt. With the right strategies, entrepreneurs can turn challenges into springboards for success.*The source of this article is GP Bullhound’s Co-Founder — Manish Madvhani’s keynote speech at Ventech’s last Portfolio Summit.