EU members just clinched agreement to raise a €10 billion fund-of-funds to retain European growth talent

Spain, Belgium, Italy, Germany and France have all committed to the new fund-of-funds vehicle, heralded as creating European collaboration in late-stage capital markets to fend off US and Chinese challengers.
EU members just clinched agreement to raise a €10 billion fund-of-funds to retain European growth talent

Not content with its existing arsenal of funding instruments, five members of the European Investment Bank today launched a targeted €10 billion fund-of-funds to spawn more mega European VC funds with sufficient dry capital to supply late growth-stage EU innovators.

The European Tech Champions Initiative is supported by EIB and its European Investment Fund but is currently underwritten by five EU member states:  France, Germany, Italy, Spain and Belgium.

The formal contract signing was held at the fringes of the eurozone's finance ministry collective, Eurogroup, as the ministers met in Brussels.

LP fund investees must have operations in at least one of the member states to be eligible, and will be expected to back EU-domiciled companies, perhaps providing more funding incentives for these companies to stay within EU borders.

Speaking at the ceremony, French economy minister Bruno Le Maire said: "We need to catch up with the US and with China. We do not want our best companies to develop outside Europe, we want them to develop inside."

Le Maire urged remaining EU member governments to join the initiative and hinted a single capital markets union for EU markets would one day be desirable. While driving venture capital into latter-stage growth investors is the main aim, this fund-of-funds was also touted as a boost for European technological sovereignty and countering US advantages from the Inflation Reduction Act.

Spain's economy minister and deputy prime minister Nadia Calvino added it was the first time the EU had put its money "where its mouth is"  to convince European scale-ups to pursue world-changing business models without moving HQ to North America or another major market.

"This is also an example of how together we're stronger - the key word of scale up is scale, so we can't act as separate actors in national levels," Calvino said.

EIF has been appointed as the fund manager for the European Tech Champions vehicle. The concept was previously floated at last year's Scale-Up Europe Conference. 

The aim ultimately is to provide a funding boost to known European tech pioneers, in later-stage growth rounds. Some might also view the fund-of-funds as a challenge to US and Asian-based investors in the European growth stage arena.

In the long term, ETCI is believed to be pursuing a significant increase in the number of €1 billion+ European LP vehicles. Its funding should create anywhere from 10 to 20 such funds in coming years, greatly enhancing the cash supply for Europe's homegrown tech scale ups.

Follow the developments in the technology world. What would you like us to deliver to you?
Your subscription registration has been successfully created.