As part of its Capital Markets Union (CMU) project, the European Commission has reformed its venture capital and social enterprise finance rules – broadening the scope of funding available to growth-focused firms.
First proposed last year, the reforms apply to the regulations behind the European Venture Capital Funds (EuVECA) and European Social Entrepreneurship Funds (EuSEF) initiatives.
Set up in 2013, EuVECA and EuSEF provided two, new types of collective investment funds to make it easier and more attractive for investors to back unlisted SMEs.
In their original forms, EuVECA and EuSEF enabled fund managers to market their funds across the EU to professional and non-professional investors who were able to commit a minimum of €100,000.
As the Commission noted in a statement, “Given the importance of making progress towards CMU, [we] decided to bring forward the general review [of the funding schemes] originally planned for July 2017.
“[We] launched a consultation on 30 September 2015 to ask whether targeted changes to the regulations could boost the take-up of these investment funds. The review identified a number of factors holding back the development of these funds.
“These reforms are a part of a range of measures that the Commission is taking to stimulate venture capital in Europe.”
In their reformed states, EuVECA and EuSEF have been opened up to a much wider variety of fund managers, and will allow a broader range of companies to benefit from EuVECA investment.
Specifically, the Commission’s changes:
The reforms also simplify the schemes’ registration processes.
European Commission financial stability and CMU chief Valdis Dombrovskis said: “[This] agreement removes another barrier to venture investment at EU level.
“The reforms we have agreed – expanding investment possibilities for funds, broadening the range of eligible managers and simplifying administration – will help investors’ capital reach the SMEs that need it.”