Last update: 31/07/2009

What is investment in venture capital?

Investment in venture capital is characterised by a higher risk than more traditional investment in securities listed on stock exchanges, but also by a potentially higher return on investment.

Venture capital investment is directed at young, fast-growing companies, notably at their early stages. By channelling funding to companies introducing new technologies or products, venture capital plays a vital economic role in supporting innovation and technology transfer.
Investment in venture capital by institutional investors, such as pension funds, banks and funds of funds, is usually indirect and made through investment funds, in the same way as investment in other alternative assets, including hedge funds.

How does the Commission foster European venture capital?

It does this through the following actions:

• Financing of SMEs and early-stage companies channelled as venture capital and funded by the Community budget under programmes managed by DG ECFIN;
• Strengthening the European venture capital markets through investments in eligible venture capital funds in Member States by the European Investment Bank Group (EIB Group), notably the European Investment Fund (EIF).