Should Europe restructure its pension and capital systems to retain more of the value created by European companies domestically?

Klaus Hommels · Nov 27, 2024

European pension funds should be compelled to allocate meaningfully to venture, which would simultaneously fix the retirement funding gap and the financing of innovation

US pension funds follow the endowment model at 10-13%+ venture allocation versus 0.02% in Europe; higher-yielding assets compound so a worker paying €1,000/month from age 20 ends with ~€750k under a German scheme versus ~$3.5m under an American one, and the unlocked capital would fund European innovation at no cost to anyone

Scope: uncomfortable with the word 'forced' but says forcing is required; requires a politician willing to touch retirement policy

18:46 20VC: Why Price Sensitivity is BS | Why "Portfolios" are Merely a Construct to Make LPs Happy | Why the Best Investment Never Happen in "Fundraising Rounds" | What Europe Needs to do to Become a Superpower Again | Klaus Hommels, Lakestar

Harry Stebbings · Jan 20, 2025

UK pension funds sitting on the sidelines and doing nothing in venture is a disgrace, and government participation could force their hand

38:22 20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Tom Hulme · Apr 10, 2025

The UK's 90 subscale local pension funds should be aggregated so they can run a world-class investment office like Yale's rather than just replicating an asset split

Sophisticated LPs like US endowments and the Wellcome Trust understand the power law and build long-term relationships with world-class analysts in-house, which a tiny fund cannot do

22:56 20VC: How to Fix the UK Tech Ecosystem | Why We Need to Flood the UK with Venture Capital | What the UK Can Learn From Sequoia, Stripe and Norway | Why Now is the Time to be Bullish on China & Lessons from Jensen Huang with Tom Hulme & Stan Boland

Philipp Freise · Jun 30, 2025

Europe must professionalize its pension systems and permit far greater allocation to alternatives so that Europeans retain a larger share of the value creation from European assets

Europe needs enormous annual investment to catch up on innovation, AI, defense and high-tech, and building equity value at home is how the region keeps the returns; Germany's GDP investment commitment and the UK's Mansion House compact are steps in that direction

Scope: accepts all foreign capital in the meantime because Europe needs capital; payoff horizon of ten to thirty years

30:30 20VC: Inside KKR's Monster $8BN European Fund | The $500M Turkey Gamble That Went Wrong | Do Andreessen & General Catalyst Scare KKR? | Will AI Kill the PE Model? | Can The PE Model Survive without IPOs and Where is the Liquidity with Philip Freise

Philipp Freise · Jun 30, 2025 · hedged

Broad-based retail participation in alternatives will happen, and Europe should move from pay-as-you-go pensions to a private capital-accumulation pillar as the US and Norway allow

His own 401(k) with a 30% alternatives allocation compounds without needing active management; the obstacle in Europe is purely regulatory plus political courage

Scope: 'I think' framing on whether it will happen

49:40 20VC: Inside KKR's Monster $8BN European Fund | The $500M Turkey Gamble That Went Wrong | Do Andreessen & General Catalyst Scare KKR? | Will AI Kill the PE Model? | Can The PE Model Survive without IPOs and Where is the Liquidity with Philip Freise

Hussein Kanji · Jan 20, 2025

UK pension funds are already reasonably long tech but absent from venture, and if they did allocate there is no experienced UK LP talent base to do it well

About 10% of DC pension capital sits in top US tech names and 5% in UK equities, so they aren't tech-averse; but being a good LP takes money and time to learn, and the UK has essentially no trained venture LPs

38:32 Uk pension funds lack experienced lp talent to allocate to venture well

Klaus Hommels · Nov 27, 2024

Even mediocre 2x venture funds would be a dramatic improvement for European pensioners

The baseline is life insurers struggling to deliver even the 3% minimum yield, so a 2x fund is on a logarithmic scale in a different orbit

21:22 Even mediocre 2x venture returns beat current pension yields

Harry Stebbings · Jun 30, 2025

The interviewer finds it ironic that the large returns made from European companies are shipped back to investors in the US

30:22 Foreign capital capturing european returns is a problem

Philipp Freise · Jun 30, 2025

The only viable way to restrain Western deficits is cutting expenditure, particularly reforming pension and benefit systems so they participate in capital accumulation and wealth creation

20-30% of budgets already goes to servicing interest on existing debt, exceeding healthcare or defense spending in many countries, while pension systems capture none of the wealth created — unlike Norway's sovereign wealth fund, which secures every citizen's pension

42:09 Cut expenditure and reform pensions to let them participate in capital accumulation

Matt Clifford · Jul 1, 2024

UK pension funds that allocate nothing to venture capital will struggle to meet their promises to pensioners

The most ambitious entrepreneurs are keeping companies private for longer or IPOing only when very mature, so most of the benefit from growth accrues to pools of capital invested in venture

37:00 Zero vc allocation pension funds will fail to meet pensioner obligations

Stan Boland · Apr 10, 2025

The British Business Bank's core job should be creatively structuring deals so that UK family offices, pensions, endowments and insurers can participate in venture, targeting LP bases that are roughly 50% national balance sheet and 50% domestic private capital.

In the US the capital is spread fairly evenly across endowments, family offices, pension funds and insurance companies, so the UK needs to energise multiple sources rather than just pensions; the UK lacks an endowment pool but has a lot of old money and family offices, and those investors need fee and carry structures that make a fifteen-year illiquid asset class workable for them.

43:07 Structure deals to blend public balance sheet and domestic private capital