European long-term financial institutions launch a strategic partnership on venture capital funding

16.12.2011

Nine leading national venture capital operators signed today a Memorandum of Understanding for the establishment of a pan-European (EU) venture capital fund of funds. The signing ceremony took place in Brussels under the high patronage of the Polish Presidency of the European Council.

Today, Caixa Capital (Portugal), Capital for Enterprise (UK), CDC Entreprises (France), Enterprise Ireland (Ireland), Finnish Industry Investment (FII - Finland), Krajowy Fundusz Kapitałowy (KFK- Poland), PMV nv (Belgium), Société Régionale d’Investissement de Wallonie (S.R.I.W - Belgium) and TANEO (Greece), members of the European Venture Fund Investors Network (EVFIN), committed to work towards the setting up of a common investment vehicle in order to address promptly the funding crisis affecting the venture capital sector across Europe.

To that end, these members signed a Memorandum of Understanding at the Stanhope Hotel (Brussels) under the distinguished patronage of the Polish Under-Secretary for Finance, Jacek Dominik, in the presence of high-level representatives from the European Commission and Permanent Representations of Member States to the EU as well as Members of the EU Parliament.

Since the 2008 financial crisis, capital raised by venture capital funds in the EU critically dropped by 70 % while amounts invested by venture capital firms in Small and Medium Sized Enterprises decreased by 50 % (source: Dow Jones Venture Source 2011 and EVCA/PEREP Analytics 2007-2009). Moreover, the EU venture capital market has remained fragmented and dominated by small players, which often do not have the critical mass required to operate trans-nationally. This contributes to affect negatively profitability and therefore keeps private investors away.

As a consequence, in accordance with the EU 2020 Strategy and the conclusions of the European Council meeting on February 4, 2011, the nine signatory institutions have been studying the feasibility of setting up by 2013, a EU venture capital fund of funds designed to pool their respective capital and expertise in a common investment vehicle. With an aspiration of € 250 million, the fund of funds objective is to play a catalytic role in the development of a pan-EU venture market by supporting primarily venture funds having a cross-border investment strategy. Such a multi-country equity fund of funds would maximize the leverage effect of investments and increase funding for venture capital funds.

The signatory parties of this fund of funds project announced that they will seek the financial support of the European Commission. They will also endeavour to involve other national operators in the EU to be part of this project.

In this respect, Mr Pascal Lagarde, CEO of CDC Entreprises, and EVFIN Chairman stated that “this fund of funds project could serve as a prototype for the future generation of EU financial instruments to support SMEs access to venture capital” that will be developed in the next Multiannual Financial Framework (2014-2020).

For further information, please contact:

Anne Riekki, johtaja, Suomen Teollisuussijoitus Oy
Puh: 050 337 4434, sähköposti: anne.riekki@teollisuussijoitus.fi

Lola Merveille, European Venture Fund Investors Network
Puh:+32 2 504 8006, sähköposti:lola.merveille@caissedesdepots.fr