14 July 2016

Capital Markets Union: new rules to support investment in venture capital and social enterprises

The proposal aims to boost investment into venture capital and social projects and make it easier for investors to invest in small and medium-sized innovative companies. In particular, the Commission is proposing to open up the EuVECA and EuSEF fund labels to fund managers of all sizes, and to expand the range of companies that can be invested in. The Commission also aims to make the cross border marketing of EuVECA and EuSEF funds cheaper and easier by explicitly prohibiting fees levied by Member States and simplifying registration processes.

These reforms are a part of a range of measures the European Commission is taking to stimulate venture capital in Europe. They include the use of EU budgetary support to attract capital from major institutional investors through a pan-European venture capital fund of funds, as well as promoting best practices in national tax incentives for venture capital to foster investment in SMEs and start-ups. The European Commission will also provide technical assistance to those Member States who wish to develop market-based finance, such as venture capital.

These measures, including the proposal, form part of the Capital Markets Union (CMU) Action Plan, which aims to unlock market-based investments by increasing and diversifying funding sources for Europe’s businesses and long-term projects. The proposal is also linked to the Investment Plan for Europe, which provides a comprehensive strategy to tackle the lack of finance which is holding back Europe's potential to grow and provide jobs for its citizens.

Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness said: "Today we are removing another barrier to investment at EU level which is a key objective of the Investment Plan for Europe. The three main changes we are proposing to the EuVECA and EuSEF regulations today – broadening the scope of eligible managers; expanding the list of EuVECA eligible assets; and prohibiting fees imposed by competent authorities – will result in a greater number of SMEs getting access to the vital finance they need to grow their businesses."

Commissioner Jonathan Hill said: "I am delighted as my last act as Commissioner to be announcing measures that will help strengthen European venture capital markets. We need European businesses to have more choice of funding and to be able to attract the investment they need here in the EU. This is another step in building the Capital Markets Union."

Full press release

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