Venture capital often finds itself in the spotlight, yet it’s a concept many misinterpret. As a serial entrepreneur bootstrapping my startups, I’ve seen firsthand how this funding model can be misunderstood, especially among European founders. Whether it’s myths about VC backing only unicorns or fears of relinquishing control, many perceptions diverge from reality. Let’s examine why these misunderstandings persist and how female entrepreneurs can navigate this terrain with clarity and confidence.
Why Venture Capital Attracts Misunderstanding
The most common misconception lies in its purpose. Venture capital isn’t tailored to every startup. Unlike other funding sources such as bank loans or private equity, VCs often aim to finance risky, high-growth companies that thrive in markets with “winner-takes-most” dynamics. Yet many founders expect VC funding to act as a life preserver for struggling businesses, or as a shortcut to profit.
Statistics further compound the confusion. It’s easy to interpret reports outlining high failure rates, more than half of VC-backed companies don’t succeed, as evidence of inefficiency. But VC's core function prioritizes finding outliers: the few startups that yield monumental returns. According to global investment data, approximately 90% of gained revenue in VC portfolios comes from fewer than 10% of their investments. This strategic approach often surprises those unfamiliar with the high-risk, high-reward model.
Lessons to Learn as a Female Entrepreneur in Europe
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Don’t Assume VC Is Your Golden Ticket
This funding model is not for everyone. For bootstrappers and revenue-focused startups, which remain rare but highly effective in Europe, VC funding could actually derail your long-term success. For instance, businesses aiming for sustainable profit over rapid expansion may find selling equity counterproductive.I’ve personally embraced bootstrapping for my ventures, including The F/MS Startup Game. We avoided VC to build products that aligned perfectly with our values and avoided dilution or external pressures. Founders need to ask themselves if a venture capitalist’s goals align with their vision. For more insights into deciding between startup paths, explore why founders choose bootstrapping instead of VC dependency.
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Understand the Kind of Companies VC Attracts
Venture capital thrives in fields requiring significant upfront investment, such as deep tech, AI, or biotech. In Europe, startups in AI gained a record of $131 billion in 2023 VC funding due to large R&D demands that deferred their growth cycles. Relying on VC might work for founders bringing disruptive technologies to market; however, simpler or service-based ventures typically perform better with early profitability models. -
Prepare for High Expectations
Since VC often focuses on scalable markets, expect rigorous conditions. Decisions about team structure, market expansion, and competitive positioning may come under scrutiny. Miscommunication or failure to meet growth benchmarks could result in strained relationships or early termination of funds. A detailed guide to building strong investor trust can help navigate these pitfalls.
Most Common Mistakes in Founder Expectations
- Applying Traditional Profit Models: Too many founders confuse VCs with banks expecting steady repayment. The VC model instead thrives on exponential scalability rather than linear growth curves. Businesses like bakeries, consultancy, or local service providers are rarely relevant to VCs.
- Underestimated Dilution Risks: Equity loss often translates into a loss of decision-making power. Some founders regret accepting VC capital, particularly if they weren’t prepared for the potential trade-off.
- Rushing Fundraising: Cash rushes rarely build credibility. I recommend taking time to refine your growth pitch, especially if attracting smaller VC pools across Europe (which tend to value diligence over speed compared to US counterparts).
How European Founders Can Improve Their Strategy
With five years as CEO of CADChain and an extensive entrepreneurial journey spanning multiple countries, I learned that aligning expectations makes all the difference. Step to avoid issues before exploring funding include:
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Research Regional VC Trends
European venture capital pools often behave differently from their counterparts globally, favoring measured progress over rapid scaling. See the CEE startup ecosystem report for guidance on winning strategies across Central and Eastern Europe. -
Build Relationships Before Asking for Checks
Start connecting with relevant VCs early instead of pitching when cash is urgently needed. Many VCs appreciate proactive founders seeking advice versus those approaching them only during fundraising deadlines.
Statistics to Inspire Smarter Decisions
By 2025, reports indicated that global VC investments reached over $300 billion. Europe specifically attracted larger segments in AI, logistics, and green energy. Here’s how women entrepreneurs benefited:
- Women-founded teams received $7-10 billion annually over northern regions such as Scandinavia, versus southern regions ranging slightly lower toward $5 billion growth allocations.
- Early collaborations with platform-building-focused segments helped European women-led companies achieve 17% higher pre-seed closure rates during Q4, 2024.
Conclusion
In the end, venture capital isn’t universally misunderstood, it’s simply mismatched with founders’ expectations or business goals. For female entrepreneurs across Europe like you, recognizing this mismatch can be empowering. Bootstrapping remains a strong option for those wanting control and sustainable returns, while VC can help ambitious growth plans. Whatever you choose, it starts with embracing transparency about your path toward growth. Ready to explore next steps? Let’s connect and share your journey.
FAQ
1. Why do founders misunderstand venture capital (VC)?
The primary misunderstanding stems from expecting VC to act as a safety net for businesses or as a straightforward path to profit. VC is focused on supporting risky, high-growth startups in markets with winner-takes-most dynamics. Learn more about venture capital's purpose
2. What types of businesses are best suited for VC funding?
VC is ideal for companies in fields like AI, biotech, and deep tech, where significant upfront investments are needed. Service or simpler business models often perform better with alternative funding strategies like bootstrapping. Explore the ideal VC-backed sectors
3. What is the major challenge female entrepreneurs face in securing VC funding?
Female entrepreneurs in Europe face challenges stemming from smaller VC pools and cultural biases. However, women-founded teams have been closing funding gaps with increasing success, achieving higher pre-seed closure rates in recent years.
4. Why do so many VC-backed startups fail?
The VC model is designed to take high risks by backing startups with a chance for monumental success. Over 50% of VC-backed companies do not succeed, as the focus is identifying outlier companies that can generate exponential returns. Understand VC portfolio strategies
5. Why do founders regret relinquishing equity in VC deals?
Equity loss can translate into a loss of decision-making power, which founders may not have prepared for. This tradeoff needs to be carefully balanced against the advantages of scaling with VC.
6. How can European founders build trust with VCs?
European founders should start building relationships with VCs early, even before fundraising. This proactive approach demonstrates credibility and long-term vision. Check out tips for relationship-building with VCs
7. When should entrepreneurs choose bootstrapping over VC funding?
Bootstrapping is better for businesses focused on profitability and sustainable growth rather than rapid expansion. It allows founders to maintain full ownership and align the business with personal values. Learn why founders choose bootstrapping
8. What regional trends define European VC funding?
European VC focuses on measured progress and sustainable growth, in contrast with the aggressive scaling priorities of U.S. VCs. Northern European countries, like Scandinavia, are leading in funding availability for AI startups and green energy initiatives.
9. Why is venture capital essential in the Central and Eastern Europe (CEE) region?
VC is vital for innovation in the CEE region, supporting startups in markets that require significant research and development before profitability, such as artificial intelligence and logistics. Check out trends in CEE startup ecosystems
10. What advice should founders follow before seeking VC funding?
Founders should research regional VC trends, refine their growth pitch, and prepare for rigorous expectations around scalability and team structure. This diligence can improve fundraising outcomes. Read the 7 myths about venture capital
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.
