Publications
& Policy

As the European Commission, the European Parliament and national governments are about to negotiate the terms of the next EU Budget, this paper shares the perspective of private market players on the role of public funding for private equity ecosystems. It also examines what can be done to ensure that EU citizens’ money is used in the most efficient way to promote the Union’s goals.

The existence of 28 different company law and corporate governance rulebooks in Europe is considered by the Commission as one of the main barriers to a Capital Markets Union. As a result, further reviews of the Accounting Directives and other relevant pieces of legislation in this field are expected over the next few years.

Public funding has long been relevant to the development of the private equity and venture capital ecosystem. National legislative programmes aim at supporting innovation through venture and growth capital, under EU state aid rules.

The European Commission Recommendation 2003/361 sets out the main factors for determining whether a company is an small and medium-sized enterprise (SME).

Invest Europe welcomes a 28th regime that simplifies and de-risks company formation, operation, and scaling across borders, enabling more businesses to meet PE/VC investability thresholds and boosting deal flow and capital efficiency. A voluntary, digital-by-default EU form that provides legal certainty and flexible governance would offer an attractive alternative to fragmented national rules, provided it is ambitious and supports companies at every stage of growth.

Invest Europe’s response stresses that growth is rarely linear, businesses need time to pivot, experiment, and restructure, often well beyond their first years of operation. The principles of flexibility, functionality, and alignment with financing needs should guide EU innovation policy, whether in terms of definitions - which must avoid rigid thresholds that risk excluding the very companies the Act should support - innovation stress tests, cross-border sandboxes, employee stock-option rules, innovation-friendly procurement, or stronger connections between research, businesses, and investors.

Invest Europe supports a GBER revision that unlocks private capital at scale, by aligning risk-finance rules with how PE/VC actually invests. and by updating key definitions, so that high-potential, investor-backed companies are not excluded by form over substance.

Invest Europe’s response supports the drive for simplification, proportionality, and interoperability, while underlining the importance of clarifying the treatment and expectations for private equity and venture capital (PE/VC) and better reflecting investor needs within the standards to ensure these are both practical and decision-useful.

In this response Invest Europe argues for more streamlined reporting requirements for fund managers subject to AIFMD "Annex IV" obligations. It comments on ESMA's approach to integrated reporting, arguing against harmonisation with UCITS.

In its response, Invest Europe advocates for clarifying eligibility of bank co-investments under legislative programmes, avoiding distortions between public-backed and private funds, and urgently revising CRR rules to distinguish between diversified fund investments and direct equity exposures, ensuring more proportionate risk weights that better reflect actual investment risks.

Invest Europe responded to the Review of Solvency II technical rules consultation, advocating for revisions to ensure insurers can include non-substantially leveraged private equity, venture capital, and infrastructure funds in the long-term equity category without complex look-through, to boost insurer take-up and unlock long-term capital for EU innovation and growth.

In this response, we emphasised that climate resilience is vital for protecting assets, ensuring market stability, and unlocking new opportunities in a climate-volatile world. By addressing financing gaps, regulatory hurdles, and scaling innovative solutions, strategic adaptation investments can strengthen markets and drive sustainable growth. This submission forms part of Invest Europe’s engagement through the Climate Resilience Reflection Group.

Invest Europe responded to the Review of the Merger Guidelines General Consultation, advocating for clearer and expanded safe harbours, well-defined presumptions, and explicit recognition of private equity’s distinct structures and incentives, to ensure proportionate, predictable, and cost-efficient merger control that supports EU investment, innovation, and SME growth.

Invest Europe responded to the EC targeted consultation on supplementary pensions, calling for the removal of restrictions to pension funds’ investments in our asset class. This response is part of a general charge against EU rules that prevent the ability of our members to raise funds from institutional investors. We argue that there is a natural alignment between the long-term liabilities of pension funds and the long-term outlook of unlisted funds – making pension funds the best placed to be investors in EU businesses through these funds. We suggest that the prudent person principle under Article 19 should not be interpreted in a way that discourages or indirectly restricts investments in long-term assets that contribute to innovation and economic growth.

Private capital – including private equity (PE), venture capital (VC), and infrastructure funds – can play a critical role in strengthening Europe's defence industrial base. Invest Europe welcomes the Commission’s intention to increase funding flexibility, support innovation, and facilitate the scaling of strategic capabilities through the amendments proposed under the mini omnibus for defence. Our members have a long-standing track record of successfully investing in companies active in defence, security, and dual-use technologies – backing innovation, growth, and industrial resilience. They stand ready to continue using their expertise and capacity in the defence sector.