Despite the overall excellent talent pool and research output at Europe’s technical universities, startups in defence, aerospace and AI face structural disadvantages in the region’s deeptech funding market. A shortage of early-stage investment capital is consistently cited as the main obstacle for founders, with the gap between Europe and the US continuing to widen. American startups benefit from larger venture funds, more developed exit markets and defence-linked procurement, leaving European peers at a relative disadvantage.
Kibo Ventures Launches Fourth Fund
Aiming to address some of these challenges, Spanish venture capital firm Kibo Ventures has opened a new chapter with the launch of its fourth fund. Kibo has already completed an €80m first close for Fund IV, while targeting a final close of €150m by Q2 2026.
The fund is backed by a mix of institutional and strategic limited partners, including BBVA Spark, the founding family behind Mahou, and the European Investment Fund (EIF). The raise signals growing external confidence in Kibo’s strategy of backing highly technical European B2B startups and supporting their global expansion in a fragmented European market with limited local exits.
Founders Shaped by Europe’s Early Tech Era
Kibo’s co-founders, Aquilino Peña and Javier Torremocha, come from Spain’s early internet and technology ecosystem, where they witnessed both the promise and the limitations of European innovation. While founding teams were capable of building globally competitive technology, scaling often stalled due to insufficient growth capital, low M&A activity among European corporates and heavy reliance on US acquirers.
Kibo was created to counter these structural weaknesses by supporting technically strong European startups with global ambitions, particularly at the seed and Series A stages, where capital shortages are most acute.
Focus on Strategic B2B Deep Tech Sectors
Fund IV reinforces Kibo’s commitment to B2B deeptech, with priority areas including data management, cybersecurity automation, vertical AI applications and dual-use defence technologies. These sectors reflect both Europe’s industrial strengths and its strategic priorities around digital sovereignty and security.
The firm plans to reserve close to half of the fund for follow-on investments, enabling continued support for portfolio companies as they progress into later funding rounds.
Backing Complex, Defensible Technologies
Kibo’s investment thesis centres on highly advanced technologies with long-term defensibility. Portfolio examples include industrial robotics and autonomous systems, such as Theker’s defence-focused robotics platform, and AI-driven enterprise software, including AnyFormat’s agent-based document conversion technology. While these companies often face longer development cycles and higher technical risk, they also benefit from strong switching costs and global relevance once scaled.
Expanding Beyond Spain into Eastern Europe
Geographically, Kibo is expanding well beyond its Spanish roots. While Spain remains a core market, the firm is increasingly focused on Poland and the Baltic states, where deep engineering talent is paired with attractive valuations. Of the 20–25 investments planned for Fund IV, with average ticket sizes of around €5m, 8–10 deals are expected to be outside Spain.
To support this broader European strategy, Kibo plans to strengthen its presence in major hubs including Paris, London and Berlin, with additional hires focused on sourcing and portfolio support.
A Differentiated Position in Europe’s VC Landscape
This approach sets Kibo apart from broader Spanish peers such as Seaya Ventures and K Fund, which invest across consumer, fintech and SaaS, as well as from pan-European firms like Atomico and Northzone, which typically focus on larger, later-stage rounds. Kibo’s niche lies in early-stage, cross-border deeptech, particularly in undercapitalised Eastern European markets.
Pushing for Structural Change in Europe
Looking ahead, Kibo advocates for greater European corporate M&A activity to reduce reliance on US exits and plans to expand the use of secondary transactions to provide liquidity for LPs, drawing lessons from the volatility following the 2021 funding boom. As Fund IV deploys, Kibo aims to play a central role in strengthening Europe’s ability to build, finance and retain globally competitive deeptech companies.