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European Fund of Funds venture-capital

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European Fund of Funds venture-capital

“What we’re looking to do to a certain extent is get them to shift money away from the US towards Europe.”

Michael Collins, Chief Executive, Invest Europe

 

Creation of a Venture Capital: public and private funds

European venture capital (VC) funding is considerably low in Europe compared to other parts of the world (in the US the amount of VC funding is double the European one).

The creation of a pan-European venture capital fund of funds, announced in 2016 by Carlos Moedas, the European Commissioner for Research, Science and Innovation, is going to boost investment in the most innovative European companies.

 

€ 1.6 billion as fresh investments for innovation

European public money will be about € 400 million, while private sector is expected to invest three times more for a total of € 1.6 billion. The engine of Europe, the Small and Medium Enterprises and large companies, will have the opportunity to receive additional investments to those of Horizon 2020 for their R&I.

 

How attractive it will be to large investors?

The Fund of Funds has also the goal to attract money from large global institutional investors in the private sector, i.e. pension funds or insurance funds. These kind of companies usually enter in VC with large investments. The pan-European VC fund of funds will undoubtedly give incentives to more companies from the US, Asia, Canada and Australia to invest as well.

In this way, it will be enhanced also the access to international capital at large scale.

In 2015, only a small proportion of Europe's venture capital funding came from international investors. Source: Invest Europe www.investeurope.eu
Source: Invest Europe www.investeurope.eu

Shift money away from the US towards Europe

Michael Collins, chief executive of Invest Europe, says that what could persuade investors to return to Europe are the number of exciting companies that have been formed over the past few years (e.g. Skype, BlaBlaCar, Rocket Internet), and the benefit to investors of diversifying their portfolios to reduce risk.

The main hopes/objectives

Will the pan-EU fund of funds’ be able to change the investment landscape over the next few years?

Will the total amount of capital increase?

Will thecomposition of the investor base change?

The goal is to see the Fund of Funds genuinely attracting investment from parts of the world and from types of investor that have not been in European venture capital before.

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