Yerik Aubakirov, serial entrepreneur and CEO of EA Group Investment Holding.
The first venture fund my organization launched in Kazakhstan delivered impressive results. But analyzing our portfolio, we noticed a clear pattern: Startups with international ambitions consistently outperformed companies focused exclusively on the local market.
This observation forced me to face a harsh reality: Local success can become a limitation. Kazakhstan’s venture market has grown significantly—six-fold over the past six years, reaching $80 million and becoming a leader in Central Asia. However, in the global venture ecosystem, this figure is merely a rounding error.
The limitations weren’t only in market size. Late-stage financing was rare, making startups overly dependent on a few investors, and the regulatory framework often lagged behind technological innovation.
On the other hand, launching a fund in a larger market meant giving up our advantages—a deep local network, established reputation and market understanding. To expand, we had to trade our position as a leading player in a small pond for an uncertain role in a large ocean, where we faced strong competition and had to rebuild our authority from scratch.
Why Should A Local Investor Create A Fund In Europe?
For investors from emerging markets, creating a fund in Europe offers significant advantages:
• Access to greater capital. European limited partners (LPs) tend to be more conservative but possess a significantly larger volume of capital.
• Access to global markets. The European venture ecosystem is connected to the U.S., Asia and Latin America.
• Stability and reliability. European regulatory requirements can help ensure long-term stability.
• Risk diversification. International presence reduces dependence on local economic crises.
• Access to government support. European funds can benefit from grants and co-financing programs (e.g., Horizon Europe, EIF).
For those from developing countries, a fund in Europe can be a tool for entering the international arena and strengthening positions in the global venture environment.
Choosing The Right Location For The Fund
Over the past decade, Europe’s venture capital market has been steadily growing. According to Invest Europe, European funds have invested more than billions into 25,500 startups over the past 10 years. Although still lower than in the U.S., the European market is actively developing.
After evaluating several locations, I chose Madrid. The numbers were impressive: Almost 53,000 engineers, a technology ecosystem worth over $37 billion, and $5.2 billion in venture investments since 2015. Madrid serves as a bridge between Europe, Latin America and emerging markets.
Beyond market indicators, there was an intangible factor—intuition. I’ve been a lifelong fan of Real Madrid soccer, so my connection with Spain provided an additional level of conviction in such an important strategic move.
Navigating Regulatory Complexities
Creating a venture fund in Europe requires understanding complex legal norms. Fund managers must comply with the Alternative Investment Fund Managers Directive (AIFMD), which establishes licensing and reporting requirements. The exact taxation varies by country.
Also, bureaucratic obstacles can significantly slow down the process. But by studying the requirements and documents, we realized this path could be shortened. Instead of building everything from scratch, it can be incredibly helpful to find a partner with an existing license and solid reputation in the European VC ecosystem.
Finding an established partner allowed us to focus on finding deals and integrating into the market rather than spending years obtaining regulatory approvals.
Important point: We agreed in advance with our partner that we would share information about incoming applications from startups. We also discussed important aspects of our cooperation upfront. This is something I strongly encourage everyone to do—not just investors from developing countries. Negotiate in advance and be honest and transparent with your partners.
Raising Capital: How European Investors Think
I find that European LPs are much more cautious compared to American ones, preferring carefully structured proposals with well-thought-out growth strategies and clear metrics. Overall, European investment culture is oriented toward long-term sustainability rather than rapid growth.
I find that, unlike emerging markets, where startups are often pushed to scale quickly, Europeans expect thoroughly developed risk mitigation strategies. On top of this, many European investors, especially institutional ones, prefer funds that meet ESG (environmental, social and governance) criteria. This makes sustainable projects more attractive to major LPs.
Risk Management And Exit Strategy
Unlike the U.S., where IPOs are a common exit strategy, many Europeans focus on mergers and acquisitions (M&A) or sales of shares in the secondary market. Some of the main risks of expanding into the European venture market include:
• Long fundraising cycles: In Europe, I’ve found that due diligence can last four to six months and more.
• Smaller checks: The average Series A round is $6 to $10 million, whereas in the U.S., it’s often higher.
• Limited secondary market: Selling startup shares can be more difficult due to a lower demand for private deals.
Is It Worth It?
When I first thought about creating a fund in Europe, I had doubts. Long decision making processes, strict compliance requirements, conservative investment approach—all this seemed challenging. However, these very challenges can create an environment where prepared investors can succeed.
If you’re planning to open a fund in Europe, my main pieces of advice are to be patient, adapt and think long-term. Unlike the U.S., where speed is important, Europe values methodical planning. Also, assess your capabilities (this is typical advice in the venture market, but nevertheless) and consider finding a partner with whom you can enter this red ocean.
Entering the European market became not just a way to grow our fund—for me, it was a bridge between Kazakhstan and a global venture ecosystem. Overall, I think it is a great way for founders to move beyond local markets.
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