The European Union will back a new 2.1 billion euro ($2.6 billion) pool of financing to support venture capital investments in the region.
It will provide 410 million euros for a new program, VentureEU, which will invest in six venture capital fund of funds. The additional money will come from other private and public sources, the European Commission said in a statement Tuesday
The goal is to generate 6.5 billion euros in new funding for the region’s startup companies, it said, and the the initial 410 million euros from the European Commission will be administered through the European Investment Fund (EIF).
The EIF itself already acts as an anchor investor in many European venture capital funds. But the new VentureEU fund, by choosing to use professional fund of funds managers, is designed to “ensure a real market approach,” the commission said.
The six fund of funds managers selected to receive the money are Aberdeen Standard Investments, Axon Partners Group, Isomer Capital, LGT, Lombard Odier Asset Management and Schroder Adveq. These firms will, in turn, invest in a variety of European-based venture capital funds.
The inclusion of funds such as Aberdeen Standard and Isomer Capital, which are registered in the U.K., is significant given that the EIF had been reluctant to provide new funding for British-based venture capital funds following the U.K.’s June 2016 vote to leave the EU.
The EIF issued a statement the day after the Brexit referendum noting the result “with regret.” It said the fund’s future activity in the U.K. would be decided as “part of the broader discussions to determine the future relationship of the U.K. with Europe and European bodies.”
Carlos Moedas, the EU commissioner for research, science, and innovation, said the new pool of funding was “vital for Europe to remain an industrial leader and economic powerhouse.”
Michael Collins, the chief executive officer of Invest Europe, a trade association for European private equity and venture capital firms, said the new pool of money was “a great step forward for investment in European innovation.”
Europe has traditionally suffered from a scarcity of venture capital funding compared to other regions. In the U.S., more than $155 billion in venture capital was invested last year. In Asia, more than $48 billion was invested in fast-growing young businesses.