Vanagon Briefing: Europe's quiet power, 5 VC trends, and why we just backed HULO💦

Europe’s venture pulse is strengthening. EIF’s latest equity survey shows rising optimism and stable dealflow, while our friends from EUVC just published their thoughts on “Europe Didn’t Get the Memo” capturing how the continent is quietly outperforming. On our side, we’re thrilled to announce our new investment in HULO, a Dutch WaterTech startup using AI to combat global water loss.

In today’s briefing:

• Vanagon invests in the CSI for network leaks: Hulo.ai

• EIF Equity Survey 2025: Sentiment Turns Up

• EUVC: “Europe Didn’t Get the Memo — and That’s a Good Thing”

• Munich: Gate Garching expands for DeepTech Startups

• 5 Trends shaping the investment landscape

💧 Vanagon invests in HULO — Tackling Global Water Loss and Strengthening Critical Infrastructure

This week, we announced our investment in HULO. The team raised over €2M fresh capital in their seed round from VP Capital, LUMO Labs, Vanagon, Rabobank, FOM, and the Netherlands Enabling Water Technology Fund (NEW).

📄 Press release (PR Newswire, Oct 21, 2025)

HULO’s WaterTech platform leverages AI and physics-based models to detect and localize leaks in water infrastructure - without the need for new hardware. Around 30% of treated water is lost globally, and HULO’s approach offers utilities a scalable, low-cost solution to detect leaks early and prevent waste.

The company is active across the EU, UK, and Latin America and aims to help save the equivalent of 4 million Olympic-size swimming pools annually by 2030. It’s Dutch innovation at global scale — and another step in Vanagon’s thesis around AI for critical infrastructure and planetary resilience.

EIF Equity Survey 2025: Sentiment Turns Up

The European Investment Fund just published its most recent Report. The regular EIF Equity Survey aims at helping to navigate through that, providing support to venture capital (VC) and private equity (PE) market players, policy makers and interested audiences on their search for information about European equity markets.

• Sentiment rebounded as fundraising stabilizes and dry powder sustains dealflow.

• Valuations rising, especially in AI, defence, and fintech, yet still attractive vs. the U.S.

• LP appetite improving: over half of GPs plan to increase EU exposure.

• Challenges remain — particularly scale-up funding and exit markets — but optimism is back.

• EIF flags AI, deeptech, climate, and defence/cyber as Europe’s strategic sectors for the next cycle.

EUVC: “Europe Didn’t Get the Memo — and That’s a Good Thing”

Our good friend David Cruz e Silva’s latest post captures the structural shift perfectly: while U.S. funding clusters in a few AI megadeals, Europe is compounding across sovereign infrastructure, deeptech, and middleware—where enterprise value actually accrues.

“Europe didn’t get the memo - and thank God for that. Because the memo was about chasing moonshots. Europe is busy building the world they’ll need to fly through.”

While the U.S. concentrated its bets in a few colossal AI labs, Europe spread its firepower across sovereign infrastructure, quantum hardware, graphene electronics, workflow intelligence and climate logistics. SVB’s Global Private Market Trends 2025 reports that half of AI VC and growth deals were in companies based outside North America.

KPMG’s Venture Pulse (Q2 2025) notes that European policymakers are deliberately prioritising capacity building in AI, defence and deeptech as part of their industrial strategies. Academic work like Europe’s AI Imperative argues that Europe’s position between the U.S. and China gives it a unique opening to lead on infrastructure, interoperability and safety - if it keeps its nerve.

S&P Global’s 2025 PE/VC Outlook found that private markets participants are “more optimistic now than a year ago,” even as macro risks remain. That sums up Europe’s Q3 perfectly: confident, but not naive.

Q3 2025 won’t be remembered for Europe producing the next Anthropic. It should be remembered for something quieter but more strategic: Europe finally acting like a bloc that knows what it’s good at. Less noise. More signal.

The result:

• Higher performance across 3- and 10-year horizons;

• Lower entry multiples, higher exit valuations via internationalisation;

• A resilient ecosystem building the “AI plumbing” instead of chasing model hype.

📖 Read the full article on EUVC

Munich: Gate Garching expands for DeepTech and Hardware-Heavy Startups

Gate Garching, next to TUM, remains one of Europe’s most productive deeptech hubs:

• 300+ startups founded, an incredible 98% survival rate, and standout alumni like planqc and SpAItial AI.

• Combines office + workshop + MakerSpace prototyping, rare in Munich.

• (Munich Startup, Oct 14, 2025 — Read the article)

🔍 Our Lens: Where Europe Compounds Quietly

5 Trends shaping the investment landscape and giving us tailwinds.

1. Capital Allocation Is Shifting
With distributions at multi-year lows and the megafund boom fading, LPs are prioritizing smaller, specialist funds. Exit realities favor smaller funds: only 3% of exits reach unicorn valuations. For smaller funds like ours, unicorns are optional – smaller exits can also return the fund multiple times.

2. AI as the Early-Stage Catalyst — (Pre-)Seed: “place to be”
AI is rewriting the rules. Also in the startup world. Capital efficiency is redefined: With AI, small teams can now create enormous enterprise value. The steepest value creation has shifted to the earliest stages — precisely where Vanagon invests.

3. DeepTech Requires New Scaling Logic
Classic SaaS metrics often fail in DeepTech. As noted in McKinsey and BCG reports, scaling DeepTech requires new mental models. Specialized DeepTech funds that understand and can navigate the new market dynamics have a clear advantage.

4. Geopolitical Resilience
It’s never been clearer that Europe must invest in its own technologies to safeguard independence and competitiveness. DeepTech — especially applied AI for industry and infrastructure — is a strategic cornerstone.

5. Munich: Europe’s DeepTech Capital
Munich has overtaken Berlin in VC volume and established itself as Europe’s DeepTech capital. A unique ecosystem of universities, corporates, and research institutions with global reach. Here, we find amazing founders with deep expertise and category-defining software, creating globally competitive, planet-positive solutions.

Closing Thought

While global headlines fixate on $10B+ AI rounds, Europe is quietly building the stack: and we are proud and happy to support outstanding founders with this rebuilding mandate.

If you like what you’ve read and want to connect with the founders and ecosystem shaping the future of Europe, reply with “Event” to this email — we’re hosting two exclusive gatherings this November.

📍 07.11. – Vanagon Investors Networking, Palma de Mallorca
🌇 14.11. – Investors Rooftop Lunch, Munich

The best is yet to come!
Axel, Sandro & Susanne