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Pan-EU funds of funds

Background

In June 2015 European Commissioner for Research, Science and Innovation Carlos Moedas proposed the creation of a Pan-European VC Fund-of-Funds programme. This project, part of the Capital Markets Union and financed under the EU budget by Horizon 2020 and COSME as well as by the European Fund for Strategic Investment (EFSI), has three objectives: to increase the size of VC funds in Europe, to increase private investment in VC and to overcome the existing European fragmentation. Importantly, the involvement of a private sector manager is one of the critical features of this new initiative.

To achieve these goals, the EU will provide “cornerstone investments of up to €300 million in one or more independently managed VC Fund-of-Funds, up to a maximum budget of €400 million for all Fund-of-funds”. The selected fund manager(s) must raise at least three times as much from other sources (the EU investment is capped at 25%). As such, the scheme is expected to raise €1.6 billion of additional investment into the European VC industry.

Invest Europe position

A pan-European VC fund-of-funds programme, bringing together private and public money, is something Invest Europe has been calling for for a long time. We believe that, for the venture capital industry to become self-sustaining and globally competitive, the number of institutions with the skill and capacity to invest in European venture capital funds must be broadened and diversified.

The proposed programme shows how EU funding can act as a catalyst for private sector investment, as it will allow these funds to attract large international pension funds, insurers and sovereign wealth funds that often struggle to access venture capital opportunities.

Invest Europe strongly welcomed the setting-up of these fund-of-funds and will continue to work with the Commission and the industry to ensure that the scheme is successfully implemented.

Managers interested in running this new fund of funds vehicle are required to apply by January 31, 2017.