Depositary requirements detrimental to VC fundraising, says EVCA

Under the proposed European Venture Capital Fund Regulation (EVCFR), VCs would benefit from a passport scheme similar to that of the AIFMD, but would also be subject to depositary requirements.

EVCA noted that the obligatory use of custodians may be detrimental to Europe as a fundraising environment for venture capitalists, as it imposes high costs on relatively small funds.

"Europe would miss an opportunity to boost SME financing and growth, an area in which Europe is so desperately running behind the curve," said Dörte Höppner, secretary general of EVCA.

Even though EVCFR is aimed at improving access to finance for European businesses, EVCA warns that investors will not benefit from depositaries, who are likely to discourage compliance with the regulation in the first place. Even the AIFMD, the most inclusive piece of regulation for the private equity and venture capital industry yet, excludes smaller funds from the depositary requirement.

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• Topics
• Regulation
• EU Commission
• EVCA