Hi, it’s Thomas from Positive Capital, M&A advisory dedicated to VC-backed companies.
Today, I’m sharing an observation that kept coming back to me over the Christmas break — and that I’ve been trying to articulate ever since.
Every Christmas, deal making slows down. No processes to run, no founders to call, no sponsors to brief. For a few days, the noise stops.
I use that silence to go back through the conversations I’ve had over the year. The ones that stayed with me. The ones where something was said that I didn’t fully process at the time.
This year, a pattern kept coming back. Founders — across fintech, HR tech, IT infrastructure, cybersecurity — all expressing a version of the same frustration. And separately, PE sponsors articulating something that felt like the other side of the same coin.
I’m not sure I have the full picture yet. But I think there’s something worth documenting here.
These founders were all VC-backed, navigating the same post-Covid reality: a market that had contracted, investors more selective, growth targets harder to hit.
What struck me wasn’t any single conversation. It was the recurrence across sectors — fintech, HR tech, IT infrastructure, cybersecurity — all arriving at a similar place.
Between 2021 and 2023, the narrative was clear: raise, hire, expand. The Series B was the obvious next step. The promise of building a European category leader through organic expansion felt within reach.
Something has shifted in the last 12 to 18 months. These founders are no longer asking whether to raise a Series B. They’re questioning whether the organic growth playbook — raise a large round, open offices across Europe, scale country by country — actually delivers on its promise for founders whose ambition is European.
The success stories exist. But they tend to share one thing in common: a US move.
For those who want to build something that wins on this side of the Atlantic — without relocating, without playing the global blitzscaling game — the honest observation is that the playbook hasn’t produced the category leaders it was supposed to.
On the other side of these conversations were PE sponsors — the ones actively building or looking to build Tech Buyout platforms in Europe.
What they articulated wasn’t primarily a financial thesis. It was closer to a conviction.
The observation they kept coming back to: a French company, a German company, a Nordic company — all competing against the same American players, all at a structural scale disadvantage, and all independently building the same features. Separate R&D teams solving the same problems. Separate sales motions targeting the same buyers. Separate roadmaps converging toward the same product.
From where they sit, that’s a waste. Not just financially — strategically. The resources exist in Europe to build genuinely competitive software companies. They’re just fragmented across too many small balance sheets.
The consolidation thesis, for these sponsors, isn’t about financial engineering. It’s about giving European software companies a real shot at competing — by pooling the innovation, the distribution, the talent that currently sits in isolation.
This is what the VC-to-PE movement, at its best, is trying to do in Europe.
Here’s where the two conversations meet — and where the gap becomes visible.
The founders I spoke with — across fintech, HR tech, IT, cybersecurity — almost all arrived at the same conclusion independently: consolidation is the right play. Not organic expansion. Not another VC round. Building a larger, more competitive European entity by joining forces with another player in the same space.
The conviction was there. The strategic logic was clear. The problem was scale.
Most of them were below €10M ARR. And below that threshold, the Tech Buyout sponsors aren’t looking. Not because the companies aren’t good. But because at that size, the asset isn’t legible to them — the revenue base is too small to underwrite the consolidation thesis with confidence.
There’s a category of founders caught in this gap. They understand the game. They want to play it. They just can’t get in the room yet.
That’s the problem I want to work on over the next few years. Not just advising on individual transactions — but figuring out how to make Early Growth assets legible to PE sponsors. How to structure alliances between two €5–7M ARR companies in a way that creates something a sponsor can actually underwrite.
These operations are complex, still rare, and poorly documented. I’ve started seeing enough patterns to think it’s worth changing that — deal by deal, observation by observation. What works, what doesn’t, and why.
I’ll be sharing what I learn here, as I go.
Thanks for reading!
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