The post-Series A valley of death in Europe is still very real, Magnus Magnusson told SiGMA, reflecting on his work with Capital4D, which he founded to guide about 20 European startups from early stages through to Series A and beyond.
Magnus Magnusson cuts a different figure to most other investors as he is refreshingly grounded: Strategy is not a luxury he advocates, but it is the difference between ideas that inspire and companies that endure.
Startup advisor and former strategist at the Bill and Melinda Gates Foundation and the United Nations, Magnusson talks about what happens after the hype when the brilliant idea of a start up meets harsh market realities.
The problem isnt a lack of ingenuity. Europe is flush with breakthrough technology and visionary founders. The problem, Magnusson argues, is a persistent mismatch between what startups need and what the ecosystem, particularly private capital is prepared to give after the initial growth spurt. Weve improved the environment from pre-seed to Series A. But what happens next, post Series A, is where we lose too many companies.
Startups, particularly those run by technical founders, are naturally obsessed with their product. Theyre enthusiastic, and rightly so. But enthusiasm alone doesnt get you through regulatory hurdles, customer acquisition bottlenecks, or entrenched incumbents, says Magnusson.
Go-to-market blind spot
Drawing from his background in development strategy, Magnusson brings something rare to the startup world: a results-based framework rooted in theory of change which means, identifying the end goal and working backwards. Its an approach often used by NGOs and policy planners, but one he believes is urgently needed in the commercial sector.
It starts with defining the problem correctly and this includes the market dimensions, he explains. Too often startups fail not because the tech doesnt work, but because the route to market wasnt stress-tested.
Magnussons advisory work doesnt just connect promising companies with capital. It pressures them to rethink execution. A go-to-market plan should be the cornerstone of every pitch deck, he says bluntly. Otherwise, investors will walk.
Magnusson acknowledges recent improvements in Europes startup landscape. Regulatory flexibility in France, tax relief for new businesses, and strong pre-seed support through EU programmes have created what he calls a funding environment, not just a market. Its competitive, but it works. up to a point.
Beyond Series A, though, capital dries up. Germany remains especially risk-averse, while France and Sweden fare slightly better. Its not just a matter of risk tolerance but its also about how success is defined. We need to move beyond the Silicon Valley obsession with unicorns. Not every company needs to become a billion-dollar firm. Solid, midsize, family-owned companies have been Europes backbone and can be again.
This fixation on scale at all costs, he warns, leads to premature exits. Many European startups sell to US firms because theres simply no local funding to take them further. Were exporting our innovation pipeline without reaping the long-term value.
Europes private sector is still too cautious, Magnusson believes, and political uncertainty isnt helping. Investors are pulling back just when we need them most. But if we could build a stronger post-Series A capital pool here, we might finally break the cycle of dependence on US buyers.
Indeed, the irony is sharp: Europe has the science, the talent, the policy support but still fails to keep its most promising companies in play.
Yet Magnus Magnusson remains hopeful. Were at a turning point, he says. If we can take the lessons from development – clear objectives, structured strategy, and data-driven decisions and apply them rigorously in startups, we wont just see better funding. Well see real impact.
Execution is everything.
