Over the past decade, American VCs have outraised their European counterparts by hundreds of billions of dollars. But why? Nathaniel Arnold and Jan-Martin Frie say several factors are at play, including fragmented markets, a disparity in private capital, and Europe's comparative absence of institutional investors. The result has been a "scale-up gap" pushing promising EU startups to seek foreign funding.In this episode of Capital Conversations, Arnold and Frie explore the challenges and opportunities in the European VC landscape, and discuss how the "brain drain" effect is hampering the growth of startups on the continent.Nate Arnold is the IMF’s Deputy Resident Representative to the EU in Brussels. Before that he worked on the euro area team, Nordic countries, and in the Fiscal Affairs department at the IMF headquarters in Washington. Jan Frie is an economist in the IMF’s Brussels office. He has also worked at the European Commission and the think tank, CEPS. Their paper 'Stepping up Venture Capital to Finance Innovation in Europe' can be found here, or through their blog. ****Through our research, thought leadership, and annual program, IMD’s Venture Asset Management Initiative aims to demystify venture asset management in Switzerland and across Europe.To find out more about IMD visit imd.orgFor more information about our Venture Capital Asset Management program visit: imd.org/finance/vam/

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