Europe’s next tech and business champions to benefit from EU regulatory revisions for venture capital

• Broader range of fund managers to access EU fund marketing ‘passport’

• Move set to enhance fundraising options for investment in start-ups, SMEs and growth companies across Europe

Invest Europe has welcomed proposals to improve fund manager access to an EU cross-border ‘passport’, facilitating venture capital fundraising and investment into Europe’s most promising small and medium sized businesses.

Today the European Commission announced its plan to revise the European Venture Capital Funds (EuVECA) Regulation, increasing the number of fund managers able to benefit from its EU marketing passport. This will allow them to raise capital from investors across the region to invest into Europe’s growing companies, instead of being limited to domestic investors.

Only 25% of European venture capital fundraising in 2013-15 was raised from European investors outside the fund’s home country, according to data from Invest Europe, the trade association representing private capital.

“As we look to increase investment into Europe’s dynamic small and medium-sized businesses, an improved EuVECA marketing passport for fund managers will encourage cross-border flows of capital and deliver on a key component of the Capital Markets Union,”

said Michael Collins, Invest Europe’s Deputy Chief Executive and Public Affairs Director.

As part of the regulation review, the Commission plans to outlaw Member States’ existing fees and charges that are currently discouraging cross-border fundraising and acting as a barrier to the achievement of a Capital Markets Union. It will also allow EuVECA-qualifying fund managers to invest in a wider range of small and medium sized European companies. Investors will now be able to support companies with up to 499 employees – double the number of staff currently permitted under the regulation – providing Europe’s dynamic mid-sized companies with better potential access to an important source of investment.

“These regulatory revisions will enhance the options for capital to be raised and invested into the growing European businesses that need it most,” said Collins. “The fees and charges unfairly imposed on fund managers by some EU Member States are barriers to fundraising and must go. When it comes to investing the capital, allowing follow-on investments into companies that are expanding rapidly and creating jobs could fuel the next big European champions, in the same way fund managers in Silicon Valley supported the growth of Google and Facebook.”

“We look forward to working closely with the European Commission, Parliament and Council in the coming months to secure the revised Regulation’s speedy adoption,” added Collins.

Last year, the total amount of private equity and venture capital investment in European companies increased by 14% from 2014 to €47.4 billion, with nearly 5,000 businesses receiving capital from European fund managers, according to Invest Europe’s annual industry data.