The pitch is familiar: build in Europe, scale fast, then ring the bell on Nasdaq. For a small set of companies, that path still exists. For most venture-backed European firms in February 2026, it’s a low-odds outcome with an extended timeline and rising execution risk.
Recent exit data underlines the shift. European VC exits rose from 648 (2024) to 715 (2025), a modest recovery, yet IPOs still account for only about 10% of exits, while M&A remains the main liquidity route. At the same time, fundraising has reset since 2022, and late-stage capital is tighter and more selective through 2025.
The European Exit Problem is simple, too many venture outcomes depend on a narrow IPO path that rarely opens at the right time. The practical response is to treat strategic M&A as the base case, and to engineer “acquirer-ready” businesses for non-tech incumbents, including industrials, banks, insurers, retailers, logistics, energy, and healthcare providers.
Why the Nasdaq dream is fading for European tech, and what that means for returns
A Nasdaq IPO is not only a listing event. It’s a financing strategy, a governance programme, an investor relations machine, and a bet that the market will reward your story at the exact moment you need liquidity. In 2025 and into 2026, that bundle looks harder to justify for Europe-first businesses.
Start with the exit mix. In 2025, M&A dominated European exits by value, and IPOs sat near historic lows. One useful summary is captured in JPMorgan’s overview of how M&A dominates EMEA startup exits. Exits increased in count (715 vs 648), but that does not mean more high-quality public outcomes. It means more companies are choosing, or being forced into, trade sales, secondaries, and smaller acquisitions.
Now add the funding backdrop. Late-stage funding has concentrated into fewer, larger rounds, with higher standards on efficiency and proof. Down rounds have persisted since 2022, hitting a meaningful share of financings in 2025 across regions. Fundraising also fell hard, with 2025 European VC fundraising reported at around €12 billion, down from €23.5 billion in 2024. That changes the maths for any route that requires multiple late-stage rounds before a listing. If you are raising in Central and Eastern Europe, it also helps to know who is active now, included in this list of Prague investors to be on the lookout for in 2026.
Finally, there is friction between the US and the listings. For European firms without significant US revenue, US investor demand can be fragile, even if the product is strong. The result is a return profile with more time, more dilution, and more liquidity risk than many original underwriting models assumed.
The IPO window is narrow, late-stage capital is tighter, and patience is priced in
When late-stage capital is plentiful, the “wait for the window” strategy can work. When it isn’t, patience becomes expensive. Fewer late-stage rounds means more internal pressure on growth plans, hiring, and go-to-market experiments. It also means more companies accept terms they would have rejected in 2021, including down rounds and heavier preference stacks.
For a Nasdaq path, tighter capital creates three compounding problems. First, it extends timelines because you must meet a higher bar for profitability and predictability before public investors will pay up. Second, it increases dilution because each additional private round takes a larger bite as valuation growth slows. Third, it raises execution risk, because every quarter you miss a target can reset the story and the price.
Investors also face fund-level opportunity costs. DPI, or distributions to paid-in capital, is a simple measure of how much cash has actually been returned to the fund relative to what investors contributed. When DPI is under pressure, long-dated IPO plans become harder to defend, even if the company is improving.
European public markets do not reliably bridge the gap to a US listing
Some boards assume a European listing can act as a warm-up before the US. In practice, European public markets often do not provide the same liquidity depth, analyst coverage, or tech-specialist investor base as the US for high-growth software. Even when local markets improve, the experience is uneven across sectors and geographies.
Cross-border listings add ongoing cost and complexity. Reporting requirements, governance expectations, and investor relations efforts increase, and the management team spends more time explaining the business instead of running it. There is also the risk of being “between markets”, too European for US growth funds, too growth-shaped for local generalists.
The most robust stance is to plan for M&A as the base case, not the fallback. Even if an IPO remains possible, an M&A-ready company negotiates from a position of strength.
Non-tech incumbents are the most underused buyer group, and they buy for different reasons.
When IPO markets weaken, strategic buyers do not disappear. They change their filters. Non-tech incumbents, from industrial groups to insurers, often keep buying because they measure value by operating impact rather than public comparables. In 2025, overall European exit values were roughly stable (about €67.8 billion), and M&A represented a majority of the exit value. Median late-stage acquisition values also rose sharply, suggesting buyers are still paying for assets that de-risk delivery and can be integrated.
What makes non-tech incumbents underused is not a lack of interest. It’s that many venture-backed firms are not built to be bought by them. A tech acquirer might accept a product that needs refactoring, or a business with a loose compliance posture, if the talent or roadmap is compelling. A non-tech board, often in a regulated sector, is less forgiving.
You can see the shape of demand in large, capability-led deals. Siemens’ move into life sciences software is illustrative, as evidenced by its acquisition of Dotmatics. The point for investors is not the sector. It is the buyer logic: acquire a product that expands an existing budget line, fits enterprise workflows, and can be sold through established channels.
Market watchers also expect continued corporate buying, where AI and automation directly reduce costs and risks. A recent summary of this direction appears in Vestbee’s M&A market outlook for 2025, which highlights stronger valuations where buyers see clear operational upside.
What a non-tech board actually wants: risk reduction, speed, and measurable cash impact
Non-tech incumbents tend to buy for outcomes that can be explained in one board pack and defended in one audit. Common motives include:
- Compliance and auditability: A bank buys tooling to reduce audit findings and improve controls.
- Cost reduction: a logistics group buys optimisation software that cuts fuel use and overtime.
- Revenue lift: a retailer invests in personalisation that improves conversion without increasing returns.
- Supply chain visibility: an industrial buyer wants fewer stockouts and more accurate planning.
- Safety and uptime: an energy operator pays for fewer incidents and shorter downtime.
- Fraud loss reduction: an insurer pays to reduce claims leakage with better detection.
Across all of these, proof beats vision. Buyers want referenceable customers, clear ROI logic, implementation timelines they can trust, and security evidence that stands up to internal review. They also worry about integration, including data flows, identity and access, procurement constraints, and vendor risk.
The valuation logic is different: synergy value, not just revenue multiples.
Strategic buyers can pay more than financial buyers because they can justify synergies, such as cost savings, cross-selling, reduced churn, or faster product launches. At the same time, they will discount heavily for integration risk and for any uncertainty in delivery.
A practical valuation bridge is simple in words: standalone value, plus believable synergies, minus the risk and time needed to make those synergies real. The “minus” is where many European startups lose value, especially if documentation is weak or customer contracts restrict assignment.
Earn-outs are also familiar with non-tech incumbents. Investors should model them early and push to define measurable, controllable milestones, so consideration does not drift into goals that depend on buyer-side execution.
How to engineer an M&A exit to a non-tech incumbent, step by step
Engineering a strategic exit is less about running a frantic sales process and more about building a business that looks safe to buy. Investors can drive this by turning “future exit options” into present operating requirements, with simple, repeatable checks at the board level.
The first step is to align on the buyer set. If the company serves healthcare workflows, list the healthcare providers and medtech suppliers, not only healthtech competitors; if it sells into finance, map banks, insurers, and core system vendors. If it supports manufacturing, include OEMs, distributors, and industrial software groups. This is not theoretical; it shapes product choices, security posture, and commercial packaging.
Second, set evidence standards that match how incumbents buy. Non-tech buyers often decide through procurement, security, legal, and finance, with a business sponsor who must defend the purchase. That means you need clean proof, not only growth curves.
Third, prepare early so you never sell under time pressure. Forced sales lead to heavy discounts, more onerous warranties, and earn-outs that transfer risk away from the buyer.
A practical reference point on how IPO considerations are changing across markets is Cleary Gottlieb’s review of global IPO market trends for 2025 and 2026. The investor’s conclusion is consistent: optionality costs money, and you must choose where to spend it.
Build an “acquirer-ready” product: compliance, integration, and a narrow wedge into a big budget.
An acquirer-ready product is not feature-rich. It is easy to approve, deploy, and govern. That starts with enterprise-grade security, precise data controls, audit trails, and a deployment model that meets the needs of regulated customers (often with defined retention, access logs, and incident response).
Integration matters as much as UI. Buyers will ask how you connect to standard systems, how identities are managed, what APIs exist, and how data moves. Investors should insist on credible integration paths and documented controls, because these shorten diligence and reduce price chips.
The “wedge” concept also helps. Win one painful workflow that already has a budget, then expand. A procurement team can approve a clear, bounded use case more easily than a broad transformation programme.
Create the buyer map early and run a quiet, repeatable process.
Build a buyer map 12 to 24 months ahead, across three rings: core industry incumbents, adjacent regulated sectors, and PE-backed platforms that can act as consolidators. Use pilots, partnerships, and board-level introductions to create familiarity. The goal is not constant selling; it is making sure potential acquirers understand the product before a formal process begins.
Deal hygiene is equally important. Keep the data room ready, maintain a clean cap table, confirm IP ownership, track customer consents for contract assignment, and tidy key commercial terms. These are small tasks that prevent significant discounts later.
When the timing is right, run a process with multiple credible bidders. Competitive tension improves terms, reduces reliance on earn-outs, and limits “take it or leave it” behaviour.
Conclusion
For most European venture-backed companies, a Nasdaq IPO is no longer a dependable plan. With IPOs sitting around 10% of exits, late-stage capital tighter since 2022, and fundraising muted through 2025, M&A is the default outcome investors should underwrite. The way to improve returns is not wishful timing, it is engineering: prove ROI in terms a non-tech CFO accepts, reduce integration risk, map likely buyers early, and keep the company clean for diligence.
