Sequoia Capital, one of the world’s most prestigious venture capital firms, is closing its London office. Having expanded into Europe only in 2020, the Silicon Valley powerhouse is now pulling back. Its reasoning is almost brutally straightforward: You don’t need to be physically present in Europe to invest in European startups.

Following Andreessen Horowitz’s decision to close its London office, this sends another troubling signal about the European startup ecosystem.

To me, this is a pretty damning verdict on Europe. Not because we lack talent, ideas, or innovative startups. Quite the opposite. Europe produces outstanding technology companies. But we still struggle to turn them into global champions, largely because we lack the capital and risk appetite to support them at scale.

While billions are flowing into AI companies like OpenAI and Anthropic in Silicon Valley, Europe’s venture capital market remains fragmented. Too much regulation, too little risk-taking, and not enough institutional growth capital.

Of course, Sequoia’s withdrawal is also part of a broader strategic reset. The firm is streamlining its operations, concentrating on fewer investments, and even shutting down its accelerator and scout programs. From a business perspective, that makes sense. But it also tells us where the biggest opportunities are currently perceived to be: Silicon Valley, not Europe.

But here’s the opportunity.

European VC firms now have a chance to step up, build stronger relationships with the best founders, and take the lead in larger funding rounds. However, that requires more than ambition. Europe needs to unlock its enormous pools of pension fund, insurance, and institutional capital to finance its own innovation.

We need to stop being a talent factory for American technology giants.

My takeaway: Sequoia’s departure should be a wake-up call. Europe has the talent, the research, and the ideas. What we are missing is the courage and capital to build truly global technology leaders ourselves. And last but not least it’s not such a bad thing if Silicon Valley stops doing the heavy lifting for us.