On 6 July the European Commission adopted a proposal for a regulation modify the existing regulations on European venture capital funds - EuVECA (Regulation 345/2013) and European social entrepreneurship funds - EuSEF (Regulation 346/2013).

The proposal is part of the wider strategy of the EU to promote and facilitate investments into growing and innovative SMEs.
With this proposal aiming at the enhancement of new financing channels towards start-ups, innovative SMEs and social entreprises, the Commission intends to promote the growth of new areas of business and to further contribute to the progress towards an European innovation-based economy.
The labels of European venture capital fund (EuVECA) and of European social entrepreneurship fund (EuSEF) were introduced by the regulations currently in force for the purpose of providing funds operating across borders that gained such qualification the opportunity of raising capital and making investments into innovative SMEs and social enterprises under a single set of rules.
Specifically, EuVECA funds are meant to support eraly stage, innovative companies, while EuSEF funds are dedicated to companies with the main purpose of generating a positive social impact.
In order to give further support to the development of these markets, the Commission has brought forward the legislative review of both regulations scheduled for 2017 and included it in its 2016 Regulatory Fitness and Performance program (REFIT).
Based on the results of the REFIT review and on the results of a public consultation held in autumn 2015, the Commission with its new regulation proposes the following:

  • extend the range of managers eligible to market and manage EuVECA and EuSEF funds to include larger fund managers, i.e. those with assets under management of more than €500 million. Large managers can provide economies of scale and trusted brands, offering benefits for investors who in turn can invest more for the ultimate benefit of venture capital and social enterprises;

  • expand EuVECA eligible assets, to allow investment in small mid-caps, and SMEs listed on SME growth markets. This is expected to allow more companies to benefit from EuVECA investments and make investments more attractive through greater diversification of risk;

  • decrease the costs by explicitly prohibiting fees imposed by competent authorities of host Member States, simplifying registration processes and determining the minimum capital to become manager.

 

Text of the proposal for a regulation

Infographics

Venture capital

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