Obstacles to Overcome While the European private equity market presents many opportunities, several key barriers to growth remain. Pension funds. The principal limitation to the growth of European venture capital is that throughout much of Europe, pension fund allocation is handicapped by unfavorable regulations, taxation, and rigid investment restrictions. These factors make it difficult, and sometimes impossible, to invest in high-risk assets like venture capital. Thus, a huge pool of potential investment remains untapped. Tax laws. Capital Gains Tax (CGT) remains high in Europe when compared with US rates. Also, share options are not treated as favorably in Europe as in the US. This reduces the incentives for risk taking and entrepreneurship.