European institutional capital is doubling down on specialised early-stage tech in Southern Europe. The European Investment Fund (EIF) has anchored Indico VC Fund III, a new EUR 125 million vehicle from Lisbon-based Indico Capital Partners, marking one of the clearest signals yet that the region’s software, AI and deep tech founders are moving into the European mainstream.
Indico VC Fund III is the sixth fund raised by Indico, which now manages more than EUR 240 million across its existing vehicles. The new fund targets a final size of EUR 125 million and will focus on Seed to Series B rounds in enterprise SaaS, AI and deep tech companies built in Portugal, Spain and Italy.
EIF anchor cements institutional confidence
The EIF has committed EUR 30 million as an anchor investor, a sizeable ticket for a mid-market venture fund and a strong endorsement of Indico’s strategy and track record. As the EU’s leading venture limited partner, EIF’s role is both financial and catalytic: its early commitment typically helps managers secure additional capital from family offices, funds-of-funds and other institutional LPs.
The investment aligns with EU frameworks such as InvestEU and Portugal Blue, positioning Indico as a key conduit for channelling EU-backed capital into high-potential technology companies in Southern Europe. For the mid-market segment, EIF’s backing reduces perceived risk and sets a benchmark for other LPs assessing comparable funds in the region.
A bet on specialised, thesis-driven venture
Indico VC Fund III fits a clear pan-European trend: institutional LPs are favouring specialised, thesis-led managers over generalist venture funds. The EUR 125 million fund size is deliberate – large enough to lead meaningful Seed to Series B rounds, but focused enough to stay close to portfolio founders and maintain discipline in deployment.
Indico’s investment thesis is tightly defined. The fund will back:
- Enterprise SaaS – software with scalable, recurring revenue models targeting global B2B markets.
- Artificial intelligence – data and model-driven businesses where AI is core to the value proposition.
- Deep tech – complex, defensible technologies with long development cycles and high impact.
By concentrating on Portugal, Spain and Italy, Indico is positioning itself as a first-call partner for the region’s strongest technical founders, while remaining open to global co-investors for later-stage capital. This regional specialisation is increasingly attractive to LPs seeking differentiated deal flow and local insight in markets that are still underpenetrated by large international funds.
Southern Europe steps up in the European VC hierarchy
The launch of Indico VC Fund III underscores how Southern Europe has moved beyond its former status as a peripheral VC market. Lisbon, Barcelona and select Italian hubs now produce repeat founders, technical talent from strong STEM universities, and an emerging base of scale-up executives.
For the EUR 10–500 million mid-market segment, this evolution is significant. A EUR 125 million fund dedicated to early-stage tech in the region:
- Creates a structured pipeline of Seed and Series A companies that can grow into mid-market M&A or growth equity targets.
- Bridges local and global capital, with Indico acting as a connector between Southern European founders and international co-investors.
- Supports ecosystem depth, helping move companies from fragmented angel funding towards institutional-grade governance and scaling.
EIF’s involvement amplifies this effect by signalling to other European LPs that the risk-return profile of Southern European tech is now competitive with more established hubs.
Risks and what will matter next
The strategy is not without risk. Concentration in early-stage, deep tech and AI exposes the fund to:
- Technology and execution risk – many portfolio companies will face long development cycles and uncertain product-market fit.
- Macro and exit risk – weaker IPO markets or slower M&A activity could extend holding periods and pressure returns.
However, these risks are mitigated by the fund’s focused size, stage diversification from Seed to Series B, and EIF’s long-term, programmatic backing under EU initiatives. Indico’s ability to syndicate with global co-investors should also help derisk later-stage financing for its winners.
The key metrics to watch will be the pace of capital deployment into high-quality deals across Portugal, Spain and Italy, and the fund’s success in catalysing follow-on rounds from international investors. If Indico executes, Indico VC Fund III will not just back a new generation of Southern European tech companies – it will help lock in the region’s status as a core pillar of Europe’s venture landscape.