European venture’s centre of gravity is tilting further south as the European Investment Fund (EIF) anchors Indico VC Fund III, a EUR 125m vehicle targeting deep tech and AI-led startups in Portugal, Spain and Italy.
Structured as a classic mid-market venture fund, Indico VC Fund III will write tickets from EUR 500,000 to EUR 10m from Seed through Series B, positioning it squarely in Europe’s EUR 10m–500m mid-market funding continuum. The fund focuses on enterprise SaaS, artificial intelligence, deep tech, spacetech and oceantech – sectors now treated as structural growth drivers rather than niche bets.
A clear signal: Southern Europe is now core VC territory
EIF’s EUR 30m anchor commitment, supported by the EU’s InvestEU programme, is a strong endorsement of specialized regional funds as a key delivery mechanism for European innovation policy. It also confirms that Portugal, Spain and Italy are no longer peripheral in the continent’s venture map.
Indico’s third flagship VC fund – and sixth fund overall – is explicitly designed to capture the next wave of “science- and software-led innovation” in Southern Europe. By targeting founders in Portugal, Spain and Italy, as well as diaspora entrepreneurs from these countries, the firm is betting that ecosystem maturity, talent repatriation and better local capital formation are converging into a sustained deal flow opportunity.
For EU institutions, backing Indico VC Fund III aligns tightly with the broader InvestEU agenda, which aims to mobilise up to EUR 372bn by 2027. The programme increasingly channels capital through specialist managers with deep local networks and sector expertise, rather than broad, pan-European generalists. Indico fits that template: a regional specialist with a repeat fund-raising track record and a sharply defined mandate around deep tech and software.
From experimentation to scale in deep tech
Fund III’s ticket range of EUR 500,000–10m is calibrated to support companies from product validation through international expansion. In practice, that makes Indico a cornerstone investor for early and growth-stage rounds in the EUR 5m–30m band – a historically under-served segment in Southern Europe, where founders often struggled to bridge from seed to serious scale-up capital.
By concentrating on enterprise SaaS, AI, spacetech and oceantech, the fund aligns with European policy priorities around digital sovereignty, climate and sustainability. Deep tech and AI, in particular, require longer time horizons and more patient capital; the presence of EIF as an anchor investor is designed to de-risk that profile for other LPs and crowd in additional private capital.
The strategy also reinforces a broader market trend: European venture is moving away from consumer-centric bets and towards high-impact, IP-heavy technologies. Indico VC Fund III is explicitly constructed around that shift, with ‘science- and software-led’ as its core thesis rather than a side pocket.
Why this matters for the mid-market
For mid-market investors and corporate acquirers, Indico VC Fund III expands the pipeline of venture-backed assets in Southern Europe that can reach EUR 50m–500m enterprise value over the next decade. The combination of:
- regional focus (Portugal, Spain, Italy and diaspora founders),
- sector specialization (enterprise SaaS, AI, deep tech, spacetech, oceantech), and
- institutional backing (EIF, InvestEU, Portugal Blue),
creates a structured path for local startups to scale to sizes that are actionable for growth equity and strategic buyers across Europe.
The fund’s launch also underlines a competitive shift. As EU institutions double down on Southern Europe as a credible launchpad for venture-scale deep tech and software companies, generalist investors who still treat the region opportunistically risk losing access to the best-originated deals. Specialist managers like Indico are increasingly the gatekeepers for high-quality Southern European technology assets.
Risks and execution challenges
The main risk is concentration: focusing on deep tech and AI in three primary markets exposes the fund to macro and regulatory shocks, particularly in AI and data governance. However, this is mitigated by:
- diversified sector exposure within high-impact tech (software, space, ocean),
- cross-border reach into diaspora founders operating in more mature ecosystems, and
- strong alignment with EU policy priorities, which tends to stabilise funding for these themes.
Execution will hinge on Indico’s ability to source and support genuinely global companies out of still-maturing ecosystems. EIF’s anchor role and the backing of InvestEU and Portugal Blue provide the signalling and capital base; turning that into a portfolio of scale-ready assets is now the core challenge.
Even so, the message from this EUR 125m close is unambiguous: Southern Europe is no longer a side bet in European tech. With Indico VC Fund III, it moves closer to the mainstream of the continent’s venture and mid-market deal flow.