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New EU rules to support investment in venture capital and social enterprises

As part of the process of creating the Capital Markets Union (CMU), the European Commission has proposed amendments to the European Venture Capital Funds (EuVECA) and the European Social Entrepreneurship Funds (EuSEF) regulations. This is part of the CMU Action Plan, which aims to unlock market-based investments by increasing and diversifying funding sources for Europe’s businesses and long-term projects.

The proposal aims to boost investment into venture capital and social projects and make it easier for investors to invest in small and medium-sized innovative companies.

In particular, the Commission is proposing:

  • to open up the EuVECA and EuSEF fund labels to fund managers of all sizes;
  • to expand the range of companies that can be invested in; and
  • to make the cross border marketing of EuVECA and EuSEF funds cheaper and easier by explicitly prohibiting fees levied by Member States and simplifying registration processes.

These reforms are a part of a range of measures the European Commission is taking to stimulate venture capital in Europe. They include the use of EU budgetary support to attract capital from major institutional investors through a pan-European venture capital fund of funds, as well as promoting best practices in national tax incentives for venture capital to foster investment in SMEs and start-ups.

Commissioner Jonathan Hill said: “I am delighted as my last act as Commissioner to be announcing measures that will help strengthen European venture capital markets. We need European businesses to have more choice of funding and to be able to attract the investment they need here in the EU.”

CTMfile take: this is another step that will help SMEs get access to financing.

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