New fund for innovation in Europe will encourage more investment

European venture capital received a boost during the Web Summit held at Lisbon, Portugal - with the announcement of €1.6 billion in venture capital funds. It will provide much-needed additional funding for Europe’s start-ups and early-stage companies.

Carlos Moedas, European Commissioner for Research, Science and Innovation, unveiled a new fund at the Web Summit 2016. The new fund will be seeded with up to €400 million of European Union money, which the Commission and European Investment Fund (EIF) hopes will ‘crowd in’ up to three times that amount from other sources, including pension funds and other large private investors from around the world.

Unlike other EU programmes that support venture capital and innovation, this one will be run by the private sector, using the contacts and the credibility of a recognised fund manager to encourage institutional investors to look again at this asset class. With this announcement, the Commission will begin the hunt for a manager to run the programme. It will complement, but run independently of, the EIF which already invests in small businesses, including through venture capital.

The new programme is designed to attract large international pension funds, insurers and sovereign wealth funds that often struggle to access venture capital opportunities. The average venture capital fund in Europe is around €65 million, which is simply too small to absorb the minimum investments these global investors need to make.
Soon this new fund could be investing money with some of Europe’s best venture capital managers who, in turn, will support Europe’s brightest ideas and smartest innovations. It is interesting to note that venture capital has spawned success stories like Skype, Spotify and Delivery Hero.

View the MBB website: www.mbb.org.mt to read more about this new funding stream.

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