EU considers public funding to boost VC investment

EU financial services commissioner backs the capital markets union plan that proposes using public funds to increase venture capital investment in Europe.

Jonathan Hill, EU financial services commissioner, has said that the European Union is hopeful that public money will increase venture capital investment in companies, according to Bloomberg Business.

Speaking at a conference in Brussels the commissioner said that in order to increase the number of venture capital funds, the amount of red tape they face needs to be reduced.

A proposal for a fund of funds using public seed money to leverage investment from non-EU organisations was made in a recently unveiled capital markets union plan, an idea which Hill endorsed in his speech.

Hill also highlighted how the average European fund is half the size of its US counterpart. This view was backed by Michael Collins, deputy chief executive of private equity and venture capital representation association Invest Europe, who said: “Most European venture capital funds are just too small.

“No institutional investor wants to be 98% of the fund – they want to be well below a dominant force, they want to be a smaller player in any given fund, they do not want that much exposure.”

In his speech, Hill said: “European venture capital lacks scale, lacks diversification and lacks geographical reach.”

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