Under VentureEU, the EU is providing cornerstone investments of €410 million in independently managed venture capital Funds-of-Funds, including €200 million directly derived from Horizon 2020. The selected fund managers are to raise at least three times as much from other sources (the EU investment is capped at 25%).
The funds are aiming to raise up to €2.1 billion of public and private investment. In turn, this is expected to trigger an estimated €6.5 billion of new investment in innovative start-up and scaleup companies across Europe, substantially adding to the amount of venture capital available in Europe.
Venture capital (VC) is vital to a well-functioning Capital Markets Union, but remains underdeveloped in Europe. In 2016, venture capitalists invested about €6.5 billion in the EU compared to €39.4 billion in the US. Moreover, VC funds in Europe are too small – €56 million on average compared to €156 million in the US. As a result, these companies move to ecosystems where they have better chances to grow fast. Around 1,500 start-ups and scale-ups are now expected to gain access to scale-up finance across the whole EU thanks to VentureEU.
The six funds selected to support VentureEU will take stakes in a number of smaller investee funds and cover projects in at least four European countries each. These investee funds will help finance small and medium-sized enterprises(SMEs) and mid-caps from a range of sectors such as information and communication technologies(ICT), digital, life sciences, medical technologies, and resource and energy efficiency.
The EU 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 ensuring a fully market-driven approach. This will attract more investments and significantly increase the availability of VC funding for start-ups and scale-ups in the EU.
On 10 April 2018, the European Commission, the European Investment Fund and the managers of two funds selected following the EIF call for expression of interest - Isomer and Axon - announced that they had come to a contractual agreement in the context of this initiative. As a result, these two funds can start investing now using EU budget resources; contractual agreements with four other funds are set to follow later on in 2018.
VentureEU is a priority action under the Commission's Capital Markets Union(CMU), and complements other actions to boost venture capital in Europe. What is notably proposed are an expansion of the European Venture Capital funds (EuVECA) regulation and proposals to address the bias in the tax system to favour equity financing over debt financing