European Commission delays VC fund-of-funds proposal

Amy King
08 November 2013

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The European Commission is to initially conduct a тfeasibility studyт in 2014 to explore the creation of a European fund-of-funds for venture capital.

The plan was announced by Sebastian Kuck, member of the cabinet of European Commission vice-president Antonio Tajani, at the EVCA Venture Capital Forum in Berlin today. If given the green light, the initiative will therefore come to fruition later than was originally hoped for.

The proposal calls for the commitment of European money to private fund-of-funds managers with an established client base of institutional investors able to match the public money. Engineered by EVCA, the initiative will run alongside the European Investment Fund and will not replace it.

"But there is sometimes a disconnect between the speed at which policy makers can move and the speed at which the venture community moves," said Paul Deninger, senior managing director at Evercore Partners and chairman of the conference. "When you mentioned 2014 for the study to begin, I thought to myself 'But what about now?'"

"We are conducting the study because we have already received different models proposed for the fund-of-funds. We have to first decide if this is a good idea or not. We need to make a thorough and solid assessment," said Kuck. "Experience shows that if you bring something that is half-cooked to the European parliament, it risks remaining there for far longer than if you had spent more time on it in the beginning."

The Commission's current Competitiveness and Innovation Framework Programme was launched in 2007 and will end in December this year, when it will have dedicated around €600m to equity investments in SMEs, according to Kuck.

"The forthcoming European Programme for the Competitiveness of SMEs and the next research framework programme called Horizon 2020 will dedicate even more financial resources than the previous programme to equity investments in SMEs," Kuck said.

The EVCA secretary-general Dörte Höppner spoke to unquote" about the need for a European VC fund-of-funds at the conference. Click here to read the interview.