The new programme aims to attract additional private funding from institutional investors into the EU venture capital asset class.
The European Commission has launched a new fund to bolster venture capital (VC) markets and draw more money to technology start-ups.
The new Pan-European Venture Capital Fund(s)-of-Funds programme intends to further address Europe’s equity gap, and attract additional private funding from institutional investors into the EU VC asset class.
Under the programme, the European Investment Fund (EIF) will offer a maximum of 25% of the total commitments of a Fund-of-Funds.
The programme will invest into a portfolio of VC funds across the continent. The Commission will commit up to €400m and will look for three times more investment from institutional investors.
The VC funds will then support a range of small businesses and entrepreneurs throughout Europe, and offer funding and active management.
The European Commission is inviting independent fund managers to apply to manage the new VC fund with a deadline for applications of 31 January 2017.
The EIF will select financial intermediaries which will then make the new finance available to European SMEs across several sectors.
EU Commissioner for research, science and innovation Carlos Moedas said: “There’s far less venture capital in Europe than in the US, and funds don’t have the scale or geographic scope to grow companies from early stage to mid-cap and from mid-cap to global players.
“The Pan-European VC Fund-of-Funds initiative tackles this problem head-on. It will lead to higher levels of investment in new generations of highly innovative European firms.”
Data from Invest Europe revealed that, European venture capital invested €3.8bn into nearly 2,800 companies in 2015.
However, while VC funds in the US raised €25bn from investors in 2014, in Europe the total was a fifth of that at €5.3bn, despite being economies of same size.