I've been watching venture cycles long enough to recognize when smart money is about to flood into an obvious opportunity — right after the strategic investors have already moved.
In 2010, if you told institutional LPs that enterprise software would dominate the next decade, they'd nod politely. But the ones who made 100x+ returns didn't wait for consensus. They saw AWS signing its first government contracts, watched Azure land enterprise deployments, and wrote checks at the seed stage when Snowflake was just three engineers with a whiteboard.
Today, I'm seeing the exact same pattern in European space tech and defence. And most investors are missing it.
The pattern that made fortunes
Let me walk you through what happened in cloud infrastructure, because the playbook is repeating itself right now:
2008-2010: The setup
- Government agencies started moving workloads to AWS
- Enterprise CTOs began pilot programs
- Infrastructure needs were clear, but adoption was nascent
- Seed valuations were rational — €3-5 million post-money was standard
2012-2014: The obvious phase
- Everyone could see that the cloud was the future
- Series A valuations jumped to over €30 million
- The easy money had already been made
- Late entrants paid premium prices for diminishing returns
The result? Pre-seed investors in companies such as Snowflake, Datadog, and HashiCorp turned small checks into substantial returns. The LPs who waited for "de-risking" paid 10x more for 1/10th the upside.
Why European deeptech is at that exact inflection point
Here's what I'm seeing right now — and why it matters:
- Government commitments are locked in
European governments aren't "considering" space and defense investments. They've already committed. ESA's budget jumped to €16.9B. Germany allocated €100B for defense modernization. France increased space spending by 25%. These aren't pilot programs—they're decade-long infrastructure buildouts.
- The infrastructure needs are clear
Europe needs sovereign satellite navigation, secure communications, earth observation for climate monitoring, and indigenous defense capabilities. This isn't speculation. The requirements are published, the RFPs are out, and procurement timelines are set.
- Valuations haven't caught up yet
Here's the opportunity: pre-seed rounds in European space tech are still closing at €3-5 million post-money. The same fundamental setup as the US cloud in 2010, but you can still get in at the ground floor.
The math that changed lives
Let me describe what pre-seed timing meant for cloud infrastructure investors.
A typical early investor who wrote a €50,000 check into a cloud infrastructure company at the seed stage in 2010 saw something like this:
- By Series B, that position was worth several hundred thousand
- By Series C, it crossed into seven figures
- By exit or late-stage rounds, we're talking about returns that funded entire families for generations
The difference between getting in at €5 million pre-money versus €50 million wasn't just 10x — it was the difference between a nice return and a wealth-defining event.
And here's what kills me: the companies weren't secrets. The opportunity wasn't hidden. Government contracts were public. Enterprise adoption was visible. The only thing stopping most investors was waiting for someone else to validate the thesis first.
Why pre-seed matters more than you think
Most LPs I talk to focus on Series A or later because it "feels" safer. They're wrong about the math, and here's why:
- Asymmetric upside lives at pre-seed
A company going from €5 million to €500 million in valuation is a 100x increase. That same company, increasing from €50 million to €500 million, represents a 10-fold increase. You're investing in the same company, the same team, the same market — but your return potential differs by an order of magnitude purely based on when you entered.
- Capital efficiency is higher
Your €100,000 at pre-seed can be 2% of the company. That same €100,000 at Series A might get you 0.2%. Ten times less ownership for the same capital deployed. The company hasn't de-risked by 10x — it's just that the market has repriced.
- Government-backed reduces traditional risk
This is the part most investors miss: European space and defense companies have their first customer locked in before they raise institutional capital. Government contracts de-risk the company while you're still at pre-seed valuations. You're getting Series B risk mitigation at pre-seed prices.
Why this time actually is different (in your favor)
I know that "this time is different" is the most overused phrase in investing. But European deeptech has structural advantages that cloud infrastructure never had:
- Reduced market tisk
US cloud companies had to convince enterprises to adopt. European space and defense companies have governments as guaranteed first customers with multi-year contracts already committed.
- Capital efficiency through grants
Government grants and ESA funding cover a significant portion of early development costs. Your equity capital goes further because founders aren't burning cash on basic R&D — they're scaling proven technology.
- Strategic importance means sustained support
This isn't a "nice to have" digital transformation. European sovereignty demands indigenous capabilities in space and defense. Political will is aligned, which means funding continues regardless of economic cycles.
The window that's closing
Here's what keeps me up at night for investors still on the sidelines:
In Q1 2025, I'm already seeing seed rounds close at €8-10 million pre-money. Series A valuations are pushing to more than €40 million. The major US funds are beginning to deploy European offices. Sovereign wealth funds are building dedicated space and defense allocations.
The pattern from the cloud is repeating: once institutional capital arrives, valuations reset. The €5 million pre-seed rounds become a €15 million seed round, which becomes a €50 million Series A.
As with cloud in 2012, by the time everyone agrees it's obvious, the asymmetric returns are gone.
What smart money is doing right now
The family offices and wealth managers I talk to who understand this aren't waiting for more proof points. They're asking different questions:
Not "Is European space tech going to work?" but "How do I get pre-seed allocation before institutional capital reprices everything?"
Not "What's the exit environment?" but "Which funds have deal flow at true pre-seed valuations?"
Not "Should I invest in European deeptech?" but "How much of my portfolio should be in this before the opportunity set changes?"
These are the questions that led to 100x+ returns in cloud infrastructure. They separate pattern recognition from pattern observation.
The real risk isn't what you think
Most investors worry about technology risk or market risk. But in European deeptech right now, neither of those is the primary risk.
The technology works — Europe's been launching satellites and building defense systems for decades. The market exists; governments have already allocated budgets.
The real risk is timing risk. Not being too early, but being too late.
The risk is writing your first check at a €50 million valuation when you could have entered at €5 million. The risk is waiting for McKinsey to validate what's already obvious to anyone paying attention. The risk is confusing "de-risked" with "repriced."
The choice every LP faces
You can invest now at €3-5 million pre-money valuations while government contracts are just being awarded and infrastructure needs are clear, but the market hasn't repriced risk yet.
Or you can wait until Series B, when valuations hit €90 million, when everyone has a space and defense allocation, when "de-risked" means you're paying for outcomes that are already reflected in the price.
I've seen this movie before. The difference between wealth-defining returns and solid performance is purely about timing — not company selection, not market conditions, just whether you acted when it was still considered early.
In 2030, wealthy investors will tell two stories about European deeptech:
"I wish I'd invested when..."
Or:
"I remember writing those early checks when everyone thought it was too early."
Which story are you going to tell?
