The Impact of Private Equity and Venture Capital on European Employment

Invest Europe, the association representing the private equity and venture capital industry in Europe, has published the seventh edition of its "Private Equity at Work" report. The study highlights the continued job creation by private equity (PE) and venture capital (VC)-backed companies across the continent.

The report indicates that PE- and VC-backed businesses increased employment by 4% in 2024. This figure marks the seventh consecutive year of net job growth and outperformed overall European employment trends by four times. During the year, these companies generated 295,312 net new jobs, a number comparable to the working population of a city like Riga.

A Detailed Analysis of Employment Growth

Job creation was recorded across all European regions, with growth ranging from 2.3% in the Nordics to 5.6% in Central and Eastern Europe. Several countries reported significantly higher increases, including Belgium (11.9%), Bulgaria (11.6%), Poland (11.1%), Austria (10.7%), and Greece (9.7%).

By the end of 2024, PE- and VC-backed companies employed 11.4 million people across Europe, representing approximately 5% of the continent's total workforce, estimated at 244 million. Employment was concentrated in major markets, with over 3 million workers in France, 2.38 million in the UK, and 1.45 million in Germany. The report also highlighted sector and investment-stage dynamics. Key industries such as ICT, Energy & Environment, and Financial & Insurance Activities all recorded job growth above the 4% industry average. Venture-stage companies led with an 8.7% increase in employment, followed by growth-stage firms at 4% and buyout-stage businesses at 3.8%.

Implications for the Tech Ecosystem and Innovation

The robust employment growth, particularly in the ICT sector, underscores the importance of private equity and venture capital investments as a driver for innovation and technological development in Europe. For CTOs, DevOps leads, and infrastructure architects, a dynamic investment ecosystem is crucial for supporting the research and development of new solutions, including Large Language Models (LLMs) and the necessary infrastructure for their deployment.

These companies' ability to create jobs, even in high-tech intensive sectors, suggests a favorable environment for the expansion and adoption of advanced technologies. This context is relevant for those evaluating on-premise deployment decisions, where the availability of talent and a healthy investment market can influence the ability to attract resources and fund projects that prioritize data sovereignty, control, and TCO. Eric de Montgolfier, CEO of Invest Europe, commented: "When we first published 'Private Equity at Work,' our aim was to show that private equity and venture capital-backed companies create jobs, rather than destroy them. We have unambiguously proved our point. Today, what also emerges is how our industry supports people and communities, while developing skills for a more innovative, competitive, and sustainable Europe."

Challenging Perceptions and Looking to the Future

The report's findings challenge common assumptions about workforce reductions following investment. Companies backed by PE and VC firms recorded a 35% job creation rate in their first year of ownership, reflecting the hiring needed to support expansion and strategic execution. While job growth moderates over time, it remains positive, with a 10% increase still recorded in the fifth year of ownership.

This overall picture highlights the crucial role that private equity and venture capital play in supporting economic growth and innovation in Europe. The ability to generate employment and develop skills, particularly in strategic sectors like ICT, provides a solid foundation for technological evolution and for the infrastructure decisions that companies face in the era of artificial intelligence.