PE firms like Zubr Capital are stepping in to replace traditional financing sources, ensuring a bright and resilient digital future in the EU.

A quick investment climate overview

Traditional European organisations are slowing investment capital. According to the same EIB reporting, the net increase fell from 14% in 2023 to 7% in 2024. Instead of viewing digital resources or new growth as profitable, many companies are shifting focus to older assets to “weather” the financial storm. That need for resilience differs from the US, where 47% of local firms focus on expansion instead of only 26% in the EU.

It is clear firms are struggling to access external or angel funding. Bank lending remains tight as global monetary policies shift – especially considering political moves forcing higher-level trade negotiations with no end in sight. The result is that more and more companies are seeking alternative financing solutions like PE to bridge any operational or expansion gaps.

What could be viewed as an emergency is actually an excellent opportunity. Digital transformation is crucial for a business to maintain a competitive level with the market. Using alternative investing to solidify digital assets ensures Europe slows the risk of falling behind in upgrading technology assets, integrating automation, and upscaling infrastructure.

The fact is that the EU's economic growth is directly tied to technology adoption. The more businesses have access to capital investment for new and innovative tools, the greater the resilience of the region as a whole. Prioritising maintenance over expansion puts companies at risk of more agile competitors from Asia, the US, and MENA SA.

Why tech investment is crucial to growth

The digital economy is no longer a pipe dream sold in tech magazines. Modern businesses are leveraging everything from AI (artificial intelligence) in data analytics to AR (augmented reality) for eCommerce engagement. Yet, even with greater access to such tools, European firms fall behind US counterparts.

Roughly 81% of US firms used advanced digital technologies, while only 74% of EU firms have integrated such tools into regular operations. That gap grows when you look at more advanced options like AI, automation, and logistics.

Such a drastic “digital lag” impacts how efficient, productive, or competitive a business is compared to others in the market. If EU firms wish to remain at the top of any industry, effort and investment must be spent to embrace AI, SaaS, and automation. That will ensure higher operational efficiency, optimise expenses, and deliver superior customer service.

R&D (research and development) is another area where investment is lacking. Only 32% of EU firms focus on active innovation, limiting the development of scalable solutions. There is a direct correlation between countries that invest in R&D and their global economic ranking. Without proper funding to support new tech startups and high-growth companies focused on developing products as they move into commercialisation, EU firms cannot keep pace with global actors.

Here is where private equity can make all the difference. PE firms offer financial backing and strategic guidance. These leaders have operational expertise and access to new and emerging markets that a business would otherwise not receive. PE support means access to AI, automation, and digitalisation, positioning a young startup for long-term resilience in the global economy.

In addition, PE-backed organisations are more likely to focus on R&D. Studies show PE support allocates greater resources to innovation and product development. Those controlling the purse strings of private firms understand bringing a new product to market through R&D is the lifeblood of many startups.

PE for funding high growth technologies

Bank loans are traditionally unsuitable for high-risk projects. Banks love predictability and focus on tangible assets as collateral should a contract fall through. The tech sector requires more of a high-risk, high-reward scenario. PE can step in and fill this gap through funding that supports R&D, strategic investment, and access to industry networks – allowing businesses to scale rapidly as they expand into new markets and refine operational models.

How can PE transform business performance?

• Firms experience 2 to 4 times the growth compared to traditionally funded counterparts
• Companies leveraging PE investment outperform on financial KPIs, including revenue growth and profitability metrics
• More successful exits (IPOs & acquisitions) are far more common with PE backing than traditional banking as they demonstrate longer-term potential

It is easy to measure the success rate of PE-backed companies through the current trends of “buy and build” strategies. Here, PE investment leads companies to leverage capital for internal growth and smaller firm acquisitions. That directly leads to accelerated expansion and consolidation in tech sectors like cloud computing, cybersecurity, and fintech.

Another trend through PE funding focuses on digital innovation. Many PE-backed firms use financial resources to invest in powerful AI tools, integrative automation, and SaaS. Such digital assets improve the longevity potential of the business, making it more attractive to other investors as it solidifies a space in the competitive marketplace.

Closely tied to PE funding is strategic oversight. PE firms want to be involved in the success of a company. They will introduce new resources, refine go-to-market strategies, and optimise operations. Such expertise quickly scales a business while simultaneously making it more efficient in the digital transformation landscape.

Case study: private equity in action

One illustrative example of private equity participation in Europe’s digital economy is the investment made by Zubr Capital in amma, a mobile service and community platform supporting pregnant women and families. The investment aligned with a broader trend of PE firms supporting early-stage digital companies with scalable models.

In this case, the private equity partner worked with amma to clarify growth priorities and explore feasible revenue strategies. The process included analytical support, operational planning, and guidance on market positioning. According to the firm, this collaboration helped amma strengthen its internal infrastructure, optimise decision-making, and adapt to a fast-changing digital environment.

Rather than solely providing capital, the PE investor contributed expertise in areas such as accounting, data analysis, and brand development. This model reflects how private equity can influence not just funding but also business resilience, particularly in high-growth technology segments.

The amma case highlights one way in which private equity is being used as an alternative financing route in the current investment landscape. With traditional capital sources under pressure, especially for tech-driven startups, such interventions may become more common as European firms seek to scale and compete globally.

PE and the future of Europe’s digital economy

Cases of PE involvement, like those from Zubr Capital to fledging company amma, demonstrate how the European market can grow. Instead of relying on traditional financing that tends to be risk-averse and requires physical assets, PE firms open doors that support the current industry transformation. Companies gain access to greater digital resources, fuelling innovation, commercialisation, and growth.

For Europe to remain competitive, it must have “smart capital.” PE offers the catalyst that will drive a new phase of digital expansion. Firms must understand the crucial role technologies play in remaining competitive with modern global businesses. Any company failing to adapt will struggle to survive.

As more tools like AI, SaaS, and automation are onboarded every day, the role of PE in Europe is expected to grow. Flexible funding, operational support, and long-term partnerships make PE a fundamental building block of Europe's future innovative ecosystem. Greater competition from the US, Asia, and MENA SA regions. For Europe to compete – it must secure access to modern tools.

The European Commission recognises the importance of alternative “smart capital” in playing on these tech mechanisms. Policy development is shifting, and a call for investment in high-growth, high-tech industries is being made to all corners of the EU.

As more regulatory support grows, so does the availability of venture capital, private equity, and growth funds. It is no longer a question of whether PE will play a role in Europe’s future, but rather, how quickly forward-thinking businesses will embrace such opportunities to reach new operational success and competitive resilience.

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