Beef Bourguignon Turned Tex-Mex (Part I)
(I haven't written here in a while. There were a few drafts, but nothing worth your time and then a couple of weeks ago it happened: Porsche announced it was selling its 20.6% stake in Rimac Group and its 45% holding in Bugatti Rimac to a US-led consortium, with Abu Dhabi's BlueFive Capital as the largest investor. I read the press release. I read the comments. I had a few conversations with peers in the European PE community. And I noticed something genuinely uncomfortable: most of them didn't really know who Rimac was. That, more than anything, is why I'm writing.)
Part I: What We Cooked, But Don’t Eat
A Note Before Anything
The reflex in European media, finance, and yes, blogs like this one, is to treat "Europe is doomed" as a kind of intellectual status signal. The more eloquently you can articulate why nothing in Europe works, the more sophisticated you sound. We all have fallen into that trap.
Everyone should be a critic of its own self, but the difference between it being healthy (structured and a tool for development) vs. unhealthy (unstructured and armful) is important. For instance, the Americans criticise themselves constantly, but the framing is almost always "here is a problem in the country I am building". The European framing is more often "here is why we are inferior to elsewhere." It's a tone problem, not a coverage problem. Just like a team member that is constantly criticizing everything and everyone and becomes toxic. This tone has done and is doing real damage. It has pushed European founders to leave to be taken seriously. It has made European institutional capital embarrassed to back European industrial bets. It has created a strange consensus where the smartest people in the room compete to be most articulate about why nothing here works, and in doing so, make sure nothing here works.
So consider this post a course correction, including for the author. The point is not that Europe is broken. The point is that Europe has been wearing the wrong clothes for two decades. Or let’s imagine a French bistro deciding the future of fine dining is Tex-Mex, or a Bavarian Gasthaus retiring schnitzel for Dungeness crab on sourdough. That is roughly what we have done with our investment culture. We have shelved beef bourguignon and schnitzel for an imported menu we can't quite cook properly, while ignoring perfectly good ingredients sitting in our own pantry. When China three decades ago was opening to the world, it had every opportunity to swap its dumplings for cheeseburgers. It didn't. It built something distinctly its own, selectively borrowing from the West, but anchoring the result in Chinese institutional logic. Today the “Chinese kitchen” produces dumplings, hot pot, dim sum and Sichuan at industrial scale, and exports them globally. Europe is in the process of finding its model, all of us should carry in our shoulders the weight to make it work.
What Just Happened
There is a sentence in the Porsche press release that should have stopped people in their tracks. Michael Leiters, CEO of Porsche AG, acknowledged that as an early-stage investor, Porsche had helped develop "Rimac Technology into an established Tier-1 automotive technology company."
Read that again. The CEO of Porsche, one of the most respected industrial brands in Europe, sitting on top of a century of automotive heritage, explicitly framing Rimac as a Tier-1 supplier alongside the likes of Bosch, Continental, ZF, Valeo. And he is saying it on the way out the door.
This is genuinely historic. Bosch was founded in 1886, Continental in 1871, ZF in 1915. The European Tier-1 landscape is a constellation of century-old houses. Find a Tier-1 supplier built from scratch in Europe in the last 40 years, supplying multiple major OEMs across multiple programmes, and you will be looking for a while. Mate Rimac built one in 15 years, from a garage outside Zagreb.
You would think this would be the headline. Instead, what we got was financial press dissecting Porsche's strategic refocus, its 93% collapse in operating profit, and what the deal means for Bugatti. We barely got a sentence on the future of European industry.
Now look at the cap table around Mate Rimac: SoftBank (Japan), Goldman Sachs Asset Management (US), Hyundai (Korea), Camel Group (China) plus other Asian and Middle Eastern investors. The one major European seat at the table was Porsche. With this transaction, that seat is not being passed to another European corporate or to a European institutional investor. It is being passed to a non-European consortium with its largest investors in the Gulf and the US. The most exciting industrial story to come out of European automotive in two decades is now majority-owned by non-European capital, and the European corporate that did the most to support its journey just monetised the position.
And that raises the obvious question: where was European institutional capital on the other side of the table? Where were the key European asset managers, the strategic state holdings, the pension consortiums, the corporate venture arms, the European PE houses? Apparently elsewhere. The conversation in our investment community has not yet caught up to the urgency of building the next thing, let alone holding on to it.
The Imported Menu
For at least 20 years, Europe has been trying to "do venture/growth capital like the Americans". And I don’t mean just the capital funds and investors. Every major city capital has tried to become "the Silicon Valley of Europe". Whether it is Paris, Berlin, London, Madrid, Lisbon, Amsterdam, Stockholm, etc. Each carved its own little ecosystem, with its own accelerators, state programmes, conferences, and pitch decks.
This is not a critique of US venture & growth capital. The American model is genuinely brilliant, at building an American economy. It works because it sits on top of conditions Europe simply does not have (not exhaustive): deep, long-duration pools of pension and endowment capital; a corporate procurement culture that actually buys from start-ups; a unified national market where one corporate contract delivers full national/continental reach; deep, liquid public capital markets that allow real IPOs; and a labour market that treats failure as experience rather than stigma.
Europe imported the funds and the conferences. We did not (and probably could not) import the underlying ecosystem. The result seems to be less than optimal, as not only the growth rates and economic development show Europe lagging, everyone complains that “Europe hasn’t produce the same number of unicorns” or that “European start-ups pale in comparison with US counterparts” (or whatever other version of the same ideas you have heard). There are real European wins in there (to name a few): Spotify, Adyen, Klarna, Wise, Mistral, Helsing, and Revolut. The latter maybe the first genuinely big European technology company in a generation. We should be louder about them, including the ones polite European investment circles prefer not to put on the list (OnlyFans is a London-built platform business at extraordinary scale, and the fact that we do not list it as a national champion says more about us than about the company).
But here is an even wider gap. The imported model has not produced a meaningful number of net-new European industrial players. Not because European entrepreneurs cannot build them. Because the imported VC & growth model was never designed for them in the first place. And Industrial, hardware, materials, supply-chain reshaping, deep-tech infrastructure businesses. These need a different kind of capital and a different kind of patience than software-shaped funds know how to underwrite. While it is here where a lot of the European strengthens and know-how, and uniqueness lives.
It is also why so many of our most ambitious industrial founders (but increasingly non-industrial founders as well), when you talk to them privately, say: "I don't want VC money. I want to find someone else." That is a striking thing to hear, and worth taking seriously. It is not a rejection of capital. It is a rejection of the imported model: the timelines, the exit pressure, the fund mathematics, the cultural assumptions about how a company should be built, etc. Or using an economic analogy, the demand & offer curve are far from their optimal meeting point, and that translates into a distorted and inefficient market.
The Companies The Capital Doesn't Look at and How They Were Actually Built
Here is the part of the argument that does the most work, so I want to slow down for it. There is a story that has hardened in European investment circles over the last decade: Europe doesn't produce industrial champions, the regulation is too thick, the capital is too thin, the talent goes to America. That story is not just defeatist. It is empirically wrong. Europe has produced a remarkable number of category-leading industrial companies. They were built almost without exception outside the imported VC model, using ownership structures and capital arrangements that would not pass an LP screening committee in San Francisco. And once you put them next to each other, the pattern is impossible to miss.
Take Airbus. Founded in 1970 as a pan-European industrial co-operation, precisely because no single European country could challenge Boeing alone. Headquartered between Toulouse and Hamburg, with deep supply-chain integration across Spain, the UK, and beyond. Now market leader in commercial aviation, ahead of Boeing in deliveries for several years running. Built almost entirely outside venture capital and growth equity. It was built instead with patient, state-aligned capital, sustained sovereign anchoring (today still around 26% combined French, German and Spanish state stakes), and a stubborn political insistence that Europe should make this thing itself. Airbus is the public-sector expression of a European patient-capital tradition. The model worked in this context and is being flexed again (e.g. Hyperloop).
Take ASML. Founded in 1984 as a 50:50 joint venture between Philips and ASMI, in a leaky shed next to a Philips office in Eindhoven (population 240,000). A region that a decade later was portrayed as in industrial decline. Philips brought the photolithography R&D, ASMI the commercial nous, and Philips backstopped the company through a brutal first decade where its survival was, more than once, genuinely in doubt. Today ASML has roughly 83% global market share in lithography and an effective monopoly on EUV (the single most important industrial input to the semiconductor industry). Most growth equity investors I know in Europe could not name three of its peers, and have never deployed a euro into anything resembling its trajectory.
Take IKEA. Founded by Ingvar Kamprad in 1943 in Älmhult, a Swedish town of nine thousand people. Today the global category leader in home furnishing, controlled through the INGKA Foundation in a structure designed explicitly to insulate the company from quarterly capital pressure and from being acquired. Foundation ownership wasn't an accident. It was the operating model that allowed IKEA to take three generations to scale internationally and to defend its long-horizon decisions across cycles. The same structural feature shows up across many of Europe's most durable industrial businesses: Velux is owned by the Villum Foundation, Bosch by the Robert Bosch Stiftung, Rolex by the Hans Wilsdorf Foundation, Carlsberg by the Carlsberg Foundation. On the family-controlled side: Riedel, the Austrian glassware family, has done more for global wine perception, education and category development over the last forty years than any wine house or merchant. Pagani in Modena. Koenigsegg in Ängelholm. Much of the German Mittelstand. The pattern is too consistent to be a coincidence: the European structures that have most reliably produced and protected category-leading industrial businesses are foundations and families, not listed corporates and not VC-backed structures. They operate on long horizons, on mission-alignment, defended against flip pressure. And they have outperformed, durably.
Take the UK Green Investment Bank. In 2012 the UK government launched GIB: capitalised with £3.8 billion, mandated to accelerate green transition, focused on offshore wind where private capital was failing on its own. By 2017 GIB had invested in 100 projects, and crowded in £8.6 billion of private capital alongside it own capital plus leverage, and completely reshaped the UK clean energy generation picture. The European offshore-wind supply chain that today leads the world is partly GIB's legacy. It was eventually acquired by Macquarie becoming another instance where European growth capital was nowhere to be seen or single handedly couldn’t compete with non-European investors, at the precise moment it was potentially about to become even more profitable or establish a more enduring model serving European economic growth, i.e. serving European interests and desired economic & political direction.
Then take the Brainport Eindhoven cluster around ASML. NXP, VDL, Signify, Prodrive Technologies, a network of high-precision suppliers. Brainport rebuilt itself out of the wreckage of Philips' downsizing in the 1990s, with a mix of regional government, university and industry collaboration that looks much more like the Mittelstand than Silicon Valley. It is, today, one of the most successful deep-tech ecosystems in the world. It is also almost entirely off the radar of headline European VC.
And it isn't just industrial in the heavy-engineering sense. Inditex was built out of A Coruña, a city of 245,000 on the Atlantic coast of Galicia, far from any fashion or capital-markets centre, and is today the largest apparel company in the world by revenue, founder-controlled. H&M was built out of Västerås, Sweden, family-controlled. The European banking heritage (Santander, BNP Paribas, ING, HSBC) has anchored consumer and corporate finance globally for decades. Revolut, again, is the natural continuation of an industry Europe has historically led.
Now look at where European capital is not showing up. The cases that should have been built using a European model and weren't, because the model wasn't available domestically when it mattered.
Rimac is exhibit A. Founded in 2009 in Sveta Nedelja outside Zagreb. Mate Rimac, by his own account, was nearly forced out of Croatia in his early years for lack of investor support, and turned to engineering services for other OEMs as a survival mechanism. The company built up through patient minority capital: Camel Group (China) early, Hyundai (Korea), SoftBank (Japan), Goldman Sachs Asset Management (US), and Porsche, the only major European corporate at the table. Today Rimac works with Porsche, BMW, Aston Martin, Koenigsegg, Pininfarina, Saudi Arabia's Ceer. It is, by every reasonable measure, the first new European industrial Tier-1 in a generation. And the only major European corporate seat just exited, replaced by a US-led consortium anchored in the Gulf. None of this is a moral failure on Mate Rimac's part. They took the capital that was available, on the terms that were on offer, from wherever in the world the patient money happened to be. The failure is that the European patient money should have been on the table and wasn't.
Wavegarden is exhibit B. Founded in 2005 in San Sebastián by a Basque engineer and a German sports economist, Wavegarden is the world's leading developer of artificial wave technology. Full international patent portfolio, 80+ engineers in San Sebastián, all R&D done in-house. The customer list now spans worldwide, mostly outside Europe, with a long pipeline of further deployments. In its category, a clear European leader. The only institutional capital that surfaces in the public domain is a 2017 corporate-minority round from WeWork, an American strategic that came in at a critical scaling moment. Beyond that the cap table is opaque, and the opacity is itself part of the story: European institutional capital backing a category leader of this kind would presumably want to be visible. More telling still is what is happening at the deployment layer. Wavegarden's first commercial parks opened (and are opening) outside of Europe with non-European capital. Wasn’t for this foreign capital Europe's category leader wouldn’t exist and couldn’t prove its worth. In the meantime are seeing a meaningful part of the value creation offered by Wavegarden by harvested elsewhere while we wait for Europe to catch-up. The technology stays in San Sebastián. The category gets mostly built somewhere else.
The pattern matters. Airbus across two countries. ASML in a town outside Eindhoven. IKEA in a Swedish village of nine thousand. Rolex in Geneva. Riedel in the Tyrol. GIB out of the UK Treasury. Brainport in a region the EU once classified as in industrial decline. Pagani in Modena. Koenigsegg in Ängelholm. Wavegarden in San Sebastián. Rimac in Sveta Nedelja. Inditex in A Coruña. None came from where the majority of the imported VC and growth equity model said the next European champion would come from. None were built in the imported VC shape. Most got there through some combination of public-private JV, foundation or family ownership, multi-decade corporate hold, sovereign anchoring, public investment-bank backing, regional industrial embedding, multi-customer commercial discipline, long-term horizon and a refusal to scale faster than capability. They are, in other words, the European model already working. Quietly, in places nobody is looking, in shapes the imported model isn't designed to underwrite, but that even the foreign models have been able in multiple occasions to identify and invest in.
When the European recipe is allowed to cook properly, it doesn't just produce respectable companies. It produces world champions. ASML is the only company on earth that can build the machines that print the most advanced chips. Airbus has been ahead of Boeing in deliveries for years. IKEA is the global category leader in its space. Inditex is the largest apparel company in the world. These are not consolation prizes. The fact that Europe has done it repeatedly, in different sectors, in different decades, should be a green light to do it again. Deliberately, in the strategic categories of the next decade.
Who Owns What We Build
There is a follow-up question that gets at the deeper structural problem. When these European champions reach scale, who ends up owning them?
The pattern is more revealing than expected.
ASML today is around 85% institutionally held. The largest shareholders are BlackRock, Vanguard, Capital Group, Norges Bank Investment Management, and Baillie Gifford. With the partial exception of the last two, no European corporate or institutional anchor of meaningful size. The single most strategically critical industrial company on the continent is, in cap-table terms, dominated by US and Norwegian asset managers. And that outcome was not inevitable. ASML began as a Philips/ASMI joint venture, with Philips holding a meaningful position for over a decade. Philips ended the JV in 1993 "as part of a general plan to focus more on its core electronic activities" and began a gradual exit. By June 2000, with the dot-com bust hitting Philips' own balance sheet, the position was reduced to 6.7%. Monetised exactly when Philips needed cash for its own restructuring. The remaining stake was sold by 2004. Philips was fully out at a market capitalisation that was a small fraction of ASML's value today. (Incidentally, Philips also sold an early stake in TSMC in 2006. The pattern was about Philips' inability to hold long-term strategic positions through a restructuring cycle, not about ASML or TSMC.)
If that pattern sounds familiar, it should. A European industrial conglomerate creates a breakthrough company, holds it through hard early years, faces its own balance-sheet pressure, and divests under a "refocus on core" framing. Twenty-five years later the spin-off is a global champion under non-European ownership while the legacy parent has gone through repeated restructurings without escaping its underlying decline. Porsche-Rimac is the same movie playing again. The trigger is identical (a step-change in operating profit), the framing is identical (refocus on core), the buyer is non-European. Twenty-five years of opportunity to build the European institutional vehicle that should be there to take the seat, and we still don't have one.
Airbus is the exception that somehow proves the rule, and it is the most important data point in this whole post. The 25.7% sovereign anchor (France's SOGEPA at 10.8%, Germany's KfW-controlled GZBV at 10.8%, Spain's SEPI at 4.1%) was deliberately maintained for over half a century specifically to preserve strategic European control. Without it, Airbus would look exactly like ASML on the cap table. Sustained political will, expressed through patient capital with a fifty-year horizon, the public-sector version of the same logic that lets foundation and family owned European industrial companies hold their positions across cycles. Sovereigns can do that. Foundations can do that. Family holdings can do that. Public investment banks can do that. What can't reliably do that is the imported VC and growth-equity model with quarterly fund mathematics. Also begs the question, given Boeing challenges, if it hadn’t held the public ownership/interest if a similar faith to Boeing would await Airbus? A big if, but one worth thinking about.
Add in the brand and people layer, and the picture gets worse
Brands developed and grew in Europe, ending owned and controlled by non-European capital/interests. Lotus is owned by Geely. Volvo Cars is owned by Geely. MG, the storied British brand, is owned by SAIC. Bugatti's parent has just moved its ownership anchor outside Europe. And maybe the next “victim” will be Leica, the Wetzlar camera maker, founded in the 19th century, the company whose red dot became shorthand for German optical engineering. Which is reportedly in talks for a sale of its controlling stake at around €1bn, with bidders including HSG (formerly Sequoia Capital China) and Sweden's Altor. Where, in any of these cases, is the European capital prepared specifically to do for these brands what Gulf and American capital have been doing for English football clubs over the last decade? English football is one of Europe's most successful brand-export categories and the model that came to dominate ownership of Premier League clubs (American institutional capital alongside Gulf sovereign capital) is structurally exactly the kind of long-horizon, brand-as-strategic-asset capital that European institutional money could have provided and largely declined to. We invented the product. We let someone else own the cap table.
People educated, developed and originally capitalised in Europe end up deploying their know-how and value in foreign lands backed by non-European capital. From the sport world we can think of all the “Cristiano Ronaldos” playing in the Saudi Pro League of football and following the financial model developed by foreign capital in European football clubs and leagues. Or Sir David Beckham’s growth plan for Inter Miami CF in the US, fully backed by non-European investors like Ares Management, The Mas Brothers and other (Sir David Beckham’s capital is the only meaningful European capital in the project). And from the traditional corporate world, the recently built Xiaomi Europe R&D and Design Center team where they “snatched” 11 top design and R&D professionals from some of the key German car manufacturers (Mercedes, Porsche, BMW, SKODA) together holding over 220 years of combined experience. Let that sink in, a foreign company just took away from European car companies 220 years of combined professional experience concentrated in 11 individuals to enhance and develop products of a direct competitor to European businesses.
To be clear: this is not an argument for protectionism. Foreign capital in European companies is good, often essential and foreign companies growing in Europe is critical for economic growth, employment generation, etc. The argument is narrower and more pragmatic. Europe needs at least one anchor seat in its own house, on the cap tables of the companies that matter most, structurally aligned with the European economy. Airbus has that. ASML, increasingly, does not. Rimac never really did. The next industrial champions probably won't either, unless we build the structures to put one there. And it matters because ownership eventually shapes priorities: investment timing, R&D location, supply-chain geography, who gets the next strategic partnership. Foreign capital is welcome on the cap table. However it should not be the only capital on the cap table.
The Wrong Funeral
Back to Porsche-RIMAC. Most of the press coverage from the last few days has been a referendum on Porsche. Will the brand survive? What does this mean for Bugatti? How does the deal value compare to expectations?
The more honest framing is about optionality. The reason Intel's struggles in the US do not feel terminal is not that NVIDIA literally replaces Intel job-for-job. It is that the US system has dozens of credible technology challengers absorbing the future: NVIDIA, AMD, the hyperscalers' silicon teams, a long tail of well-capitalised start-ups. Detroit's slow decline does not read as the end of American automotive because there are five, ten, fifteen players attempting the next chapter (Tesla, Rivian, Lucid, plus a constellation of EV-component and software companies). Not all will make it. The system has more than one bet on the future. Legacy decline is survivable because the replacement portfolio exists.
Europe is at the same crossroads in automotive, and our replacement portfolio is alarmingly thin. The CEO of Porsche just publicly named one company as a new Tier-1 supplier. One. The right question is not whether Rimac specifically replaces Porsche head-for-head. That is the wrong question, framed at the wrong level. The right question is two-fold: why have we produced one Rimac and not twenty? And why is the one we produced now corporately anchored outside Europe, with most of our institutional capital still seemingly unaware of its existence? If anything at this point it should be a cultural mark, of entrepreneurship, engineering ingenuity and technology development.
Some of the answer is, frankly, that we will fail along the way. Of course we will. Twenty industrial bets do not produce twenty winners; they produce two or three winners and seventeen things to learn from. That's how every successful industrial ecosystem in the world works. Europe needs to stop reading each individual failure as proof the whole exercise was misguided. That asymmetry (celebration of others' winners, panic at our own losers) is exactly the cultural reflex that has to change. Optionality requires a portfolio. A portfolio requires accepting losses. And the upside, when the breakout comes, is large enough to justify everything that didn't. This is not a trait of an European/American/Chinese specific model, it is pure math, almost a law of nature: failure is statically part of the process. It is upon us to then frame it correctly.
There is also the live question of what happens next? Verne, Rimac's autonomous robotaxi venture, is the test case in real time. Autonomous urban mobility is one of the genuinely transformational technology bets of the next decade, and the moat in autonomous mobility is operating hours in real cities. Not algorithms, not compute. Operating hours. Waymo's lead is fleet-hours on real streets. Tesla's data advantage is fleet-hours. The Chinese players' advantage is fleet-hours, granted at scale by a state that decided autonomous mobility was strategic infrastructure. Europe is the only place that can grant operating hours to a European autonomous vehicle company. If Munich, Milan, Lyon, Lisbon, Vienna and Hamburg don't, then no city in California or Shanghai will do it on their behalf. Verne can be the most technically capable autonomous platform in Europe and still lose, simply because it never gets to operate at sufficient scale to compound its data advantage. By the time we decide to use that lever, the technology will have matured elsewhere, and we will be, as we always are, buying it back at a premium.