How a venture firm invests in an increasingly fragmented world

Today, the world is riven by cultural differences, political divisions and geopolitical disputes – a challenging environment for any investor hunting for startups that can grow enough to generate venture-scale returns.

Operating out of offices in Amsterdam, Copenhagen, Berlin and Tel Aviv, Kompas VC has developed a regionally sensitive strategy to navigate and invest in this fragmented world. The company told TechCrunch that it is investing new capital in this approach with a new fund of 160 million euros ($187.5 million).

“We see that the world really falls into three main spheres of economic activity, political activity – the United States, Europe and China” – Sebastian Peck VC compasstold TechCrunch. “We see these three areas today following very, very different trajectories.”

Compass has built a reputation for supporting startups tackling key industry competitiveness challenges, from manufacturing and supply chains to critical infrastructure and sustainability. These themes have not disappeared, but different regions emphasize them to different degrees.

“There was a lot of enthusiasm around these topics in 2021,” Peck said of the year Compass was founded. “In 2026, we’re in a very, very different paradigm. It’s all about AI, it’s all about rapid growth, very explosive growth. It’s part of what we’re playing, but not part of what we’re advocating.”

“Our focus is on everything in the physical world, related to the production of physical goods,” he said, adding that Kompas is focused on startups working on decarbonization, productivity and risk management. “We found our niche.”

This niche seems quite broad. Reloading does it’s fashionable in almost every market and depending on the startup, these markets are usually large enough for a firm like Compass.

Although it’s been underpowered by some venture funds these days, Kompas’ just-raised second fund should give it ample room to lead the early stages with checks ranging from €3 million to €5 million.

As a European fund, Kompas has access to a number of founders and startups in the region. But it is important to weigh how global fragmentation may limit the potential for some to deliver venture returns. Peck points to prefab homes as an example. This approach is widely used in the Scandinavian countries, but not so common in Germany or the rest of Europe, let alone the US.

“It feels like such an intuitive solution. It’s an efficient industrial product. It should be highly scalable,” he said. Ultimately, he said, the reason it didn’t resonate outside of Scandinavia had more to do with “cultural conditioning” than the technology itself. “In this industry, if the U.S. isn’t a market you can go to, you have to look very, very carefully at whether there’s a broad enough addressable market.”

The fragmentation extends beyond the apartment. In Europe, for example, sustainability is still widely attractive, unlike in the US, where the topic lacks the cachet it did a few years ago.

Still, a lot can change quickly, Peck admits. “We’re investing on 10-, 15-year horizons. That’s a few legislative cycles for a bridge, and sometimes things change in unexpected directions.”

The changing landscape is both a challenge and an opportunity for a small investor like Kompas. “I think there’s a big place for highly focused, highly specialized, small funds like ours to be the first to sign up and remove certain themes and certain founders,” Peck said.