VentureEU hopes to attract more investment in member state start-ups.
The European Commission (EC) and the European Investment Fund (EIF) are launching a pan-European venture capital (VC) funds-of-funds plan called VentureEU.
€410m of EU funding will be used to raise €2.1bn of public and private investment for up to 1,500 start-ups and SMEs across the 28-state bloc.
In turn, it is hoped this will set off an estimated €6.5bn of fresh investment in companies across Europe, increasing the availability of VC in the EU.
An important boost for EU start-ups
EIF chief executive Pier Luigi Gilibert said: “VentureEU is an important addition to the European equity scene. Whilst we have supported more than 500 funds to date, this is the first time that the EU has created such a unique programme.”
Announced in 2015 as part of the EC’s Capital Markets Union action plan, the six funds-of-funds will contribute capital to a selection of VC funds, focused on at least four European countries each.
These VC funds will in turn invest in a range of start-ups and SMEs in various sectors, including information and communications technology, life sciences, and energy.
The EU’s investment in VentureEU will be managed by the EIF under the supervision of the EC, and will be overseen by six experienced private fund managers.
The aim of the programme is to attract global investors, such as insurers and pension funds that currently find European VC funds too small. The average VC fund in Europe is around €56m but the funds need to be able to raise at least €150m to attract these large private investors.
Facilitating growth and investment
“It’s great to see the launch of this EU initiative to facilitate more investment by private institutions into European venture capital,” said Nenad Marovac, Invest Europe vice-chair and founder, and managing partner of VC firm DN Capital.
“Major global investors will now be able to benefit from the strong returns European VC fund managers are delivering.”
EC vice-president Jyrki Katainen, responsible for jobs, growth, investment and competitiveness, said: “In venture capital, size matters. With VentureEU, Europe’s many innovative entrepreneurs will soon get the investment they need to innovate and grow into global success stories. This means more jobs and growth in Europe.”
The EC explained that European VC funds are just too small at present to make a major impact – €56m on average compared to €156m in the US. “As a result, these companies move to ecosystems where they have better chances to grow fast. The number of companies reaching the ‘unicorn’ status of more than $1bn market valuation at the end of 2017 was 26 in the EU compared to 109 in the United States and 59 in China.”
Isomer Capital and Axon Partners Group have signed up and will be joined by Aberdeen Standard Investments, LGT, Lombard Odier Asset Management and Schroder Adveq, to be finalised over the course of this year. Selected funds can be contacted from today (10 April).