The European Commission and the European Investment Fund (EIF) have launched a venture capital programme called Venture EU to boost investment in innovative startup and scaleup companies across Europe, doubling the amount of venture capital currently available on the continent.
Backed by EU funding amounting to €410 million, the programme aims to generate €2.1bn from public and private investors for the benefit of six participating funds. The six funds will take stakes in a number of smaller investee funds and cover projects in at least four European countries each. These investee funds will invest in a range of start-ups and small and medium-sized companies in sectors such as information and communications technology, life sciences, medical technologies and energy. This is expected to trigger an estimated €6.5 billion of new investment in approximately 1,500 startups across the bloc.
The EU’s investment in VentureEU will be managed by the EIF under the supervision of the Commission and rolled out via six professional and experienced fund managers. The six funds are to be managed by Aberdeen Standard Investments, Axon Partners Group, IsomerCapital, LGT, Lombard Odier Investment Managers and Schroder Adveq.
Commission 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."
Venture capital (VC) remains underdeveloped in Europe. The average size of European venture capital funds is €56m compared with €156m in the US, according to the European Commission. In 2016, venture capitalists invested about €6.5 billion in the bloc compared to €39.4 billion in the US.
Moreover, Europe has been lagging behind the US and China in terms of startup companies reaching “unicorn” status. US and China had 109 and 59 “unicorn” companies with market cap exceeding $1bn (€808m) at the end of 2017. Europe, meanwhile, had just 26.
VentureEU, is part of the wider ecosystem that the EU is putting in place to give Europe's many innovative entrepreneurs every opportunity to become world leading companies.
On 1 March 2018, new rules on venture capital investment (EuVECA) and social entrepreneurship funds (EuSEF) entered into application, making it easier for fund managers of all sizes to run these funds and allowing a greater range of companies to benefit from their investments. The new rules will also make the cross-border marketing of EuVECA and EuSEF funds less costly and will simplify registration processes.