Europe's Tech Companies Continue "Outflow": $1.4 Trillion in Market Value Lost Over 10 Years

Why is Europe’s Capital Market Struggling to Retain Domestic Tech Companies?

Cailian Press, March 25 (Editor: Niu Zhanlin) A recent study shows that over the past decade, European tech companies have collectively lost a market value of up to €1.2 trillion (about $1.4 trillion) through overseas listings or acquisitions by foreign firms.

The study was conducted jointly by Swedish private equity firm EQT AB and consulting giant McKinsey. It estimates that between 2014 and 2025, the total value of European tech companies acquired by non-European firms or going public abroad is about €700 billion. As of January this year, the overall market value of these companies has surged to approximately €1.2 trillion.

The research highlights an increasingly urgent issue for European policymakers and capital market experts: leading “European homegrown champions,” including chip design company Arm and music streaming platform Spotify, are shifting toward the U.S. market to access deeper capital support.

Victor Englesson, head of EQT’s technology division, pointed out that this “outflow” has multiple impacts on the European economy: not only does it mean fewer jobs, but also less quantifiable losses—such as weakened local technological accumulation and the potential loss of future entrepreneurs.

Englesson stated, “When a European company chooses to list in the U.S., its development focus often shifts—and usually permanently. The choice of listing location may seem like a financial decision, but fundamentally it’s about choosing the future growth environment for the company.”

In fact, European countries have long been aware of this issue. Market observers and regional officials have repeatedly emphasized the urgency of reforming Europe’s capital markets.

In January, IMF Managing Director Kristalina Georgieva called on European leaders to accelerate the construction of the Capital Markets Union, improve energy alliances, lower cross-border labor mobility barriers, and increase investment in R&D and innovation.

Nicolai Tangen, CEO of Norway’s Norges Bank Investment Management (NBIM), recently warned that Europe must act quickly to achieve capital market integration. “In terms of capital markets, we really need to pick up the pace. Winners will take all. Capital always flows to the most liquid and highest-valued markets, so solving this problem is crucial.”

Europe’s Capital Markets Urgently Need Integration

However, EQT itself has previously sold some tech assets or arranged overseas listings. Last year, the firm sold AI startup Sana for $1.1 billion to U.S.-based Workday. Additionally, reports suggest EQT is considering listing cybersecurity firm CFC in New York.

Bjørn Sibbern, CEO of SIX Group, which operates the Swiss stock exchange, said, “The U.S. gets it right by viewing capital markets as the core channel for corporate financing, whereas Europe lags behind. Compared to that, the U.S. does better, and Europe needs to catch up.”

To reverse this trend, the EU is preparing to establish a €5 billion “European Scale Fund” to support the development of quantum computing, AI, and other deep-tech fields.

Laura Fruehauf, global transactions lawyer at Freshfields, said, “For Europe, continuously mobilizing more capital into the domestic market to stay competitive with the U.S. remains crucial. Especially in defense, AI, and broader deep-tech sectors, the ‘European champion’ identity itself could become an advantage over international competitors.”

However, signs of waning attractiveness in the U.S. market are emerging. For example, payment company SumUp is considering listing in Europe after previously planning an IPO in the U.S.; crypto broker Bitpanda has chosen Frankfurt as a potential listing location.

Additionally, European companies aiming to enter benchmark indices usually need to reach a certain size; if listed in New York, their U.S. operations must also be large enough to attract local investors, or they risk becoming overlooked “marginal stocks.”

Sibbern noted, “Many European companies listed in the U.S. don’t perform ideally—whether in stock price or market attention. If their performance isn’t strong enough, they can easily get ‘lost’ in the vast market.”

(Cailian Press, Niu Zhanlin)