European venture capital markets remain fragmented and their potential is not yet fully exploited. Venture capital funds have to deal with separate registration and different tax treatments when investing in other member states. This impedes them from specialising, diversifying and growing.
Given the effects of the financial crisis and the associated economic uncertainty, a well-functioning venture capital market can help to mitigate the effects of the crisis and tackle the barriers to innovation. Venture capital funds are a valuable source of finance for innovative firms with a high growth potential. The purpose of this report is to provide a summary of the policy work in the period from 2005 to 2009 on removing obstacles to cross-border venture capital
In general, the European venture capital markets remain fragmented and their potential is not yet fully exploited. Venture capital funds and their management companies still have to deal with separate registration and different tax treatments when investing across borders in the EU. These regulatory barriers impede funds from specialising, diversifying, growing and reaching economies of scale. Cross-border problems have worsened for the funds due to the impact of the financial crisis on fundraising and investing both locally and across borders.
Having undertaken substantial analytical work, collected input from public consultations, proposed policy actions and legislative measures between 2005 and2009, barriers to cross-border operations of venture capital funds remain in the EU.
Documents associated with this article
Venture capital in Europe document.pdf
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