The European Union will back a fund to support venture capital investments in the region
The European Union will back a new fund which will invest 2.1 billion Euros in startups. This pool of financing will support venture capital investments in the region as part of its goal to generate 6.5 billion euros in new funding for the region’s startup companies.
The EU said in a statement on Tuesday that it will provide the initial 410 million euros which will be administered through the European Investment Fund (EIF). The sum will support a new program, VentureEU, which will invest in six venture capital fund of funds. It said that additional money will come from other private and public sources.
The commission said the EIF itself already acts as an anchor investor in many European venture capital funds. But the new VentureEU fund, by choosing to use professional fund of funds managers, is designed to “ensure a real market approach”.
The six funds managers selected to receive the money are Aberdeen Standard Investments, Axon Partners Group, Isomer Capital, LGT, Lombard Odier Asset Management and Schroder Adveq which will, invest the sum in a variety of European-based venture capital funds.
The selection of U.K. based funds such as Aberdeen Standard and Isomer Capital is significant as the EIF had been reluctant to provide new funding for British-based venture capital funds following the U.K.’s June 2016 vote to leave the EU and had regretted the UK’s referendum results to leave the European Union the day after referendum results. It said the fund’s future activity in the U.K. would be decided as “part of the broader discussions to determine the future relationship of the U.K. with Europe and European bodies.”
The EU commissioner for research, science, and innovation, Carlos Moedas said the new pool of funding was “vital for Europe to remain an industrial leader and economic powerhouse.”
The chief executive officer of Invest Europe, a trade association for European private equity and venture capital firms, Michael Collins said the new pool of money was “a great step forward for investment in European innovation.”
Europe has traditionally invested less in venture capital compared with other regions such as the U.S. and Asia. While in the U.S., more than $155 billion was invested in venture capital last year, fast-growing young businesses in Asia received more than $48 billion.