The evidence from Berlin suggests that European venture capital may be the latest recipient of a large dose of state medicine. At the recent EVCA Venture Forum held in the city, the European Private Equity and Venture Capital Association (EVCA) revealed it is in talks with the European Commission over the creation of a 10-year, €1.5 billion European venture fund of funds programme.
According to EVCA director Thomas Meyer, the programme would involve putting €300 million of public funds out for tender every two years, available only to funds of funds managers able to raise a matching amount from private sources. The trade body believes matching public funding can be a powerful incentive to attract private capital, which the European venture industry lacks.
European venture funds currently find themselves hit by a double whammy on the fundraising front. Institutional investors have long been sceptical of the European venture segment, frequently citing it in surveys as the least attractive area of private equity investment. Given the fundraising drought now affecting the market generally, fears are growing about the ability of European early-stage companies to access capital.
On stage at Berlin, UK minister of science and innovation Lord Drayson said that “urgent government intervention” is the way forward for the venture industry. He called for the creation of a €3 billion vehicle “to underpin Europe's economic position in the world and generate the highly skilled jobs we need”.