The European Venture Fund Investors Network

Objective

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The European Venture Capital Fund Investors Network (EVFIN) is a dialogue platform launched in March 2011 by leading national venture capital (VC) investors in response to the ongoing funding crisis in this sector across the EU. Given the key role of venture capital in the EU's competitiveness and growth, and considering the inefficiency of the EU venture capital market, EVFIN members decided to: share best practices among EU venture capital investors to strengthen their ability to improve the equity financing environment in their national markets; and develop a common understanding of the EU market. o CONTRIBUTE TO THE EU PUBLIC DEBATE AND EXPLORE MEASURES AIMED AT CREATING A SUSTAINABLE EUROPEAN VENTURE CAPITAL MARKET Acting as a partner of European institutions (European Commission, European Parliament, European Investment Bank / European Investment Fund, etc.) by contributing to projects and policies related to venture capital financing and helping to implement relevant and appropriate initiatives approved by EU decision-makers; o ENCOURAGE THE ESTABLISHMENT OF A JOINT PAN-EU INITIATIVE To quickly address the venture capital crisis through collaborative investment strategies aimed at supporting and developing emerging and proven fund management companies; o To provide an opportunity for constructive dialogue between all stakeholders in the EU venture capital industry and EU institutions (EVFIN, EVCA, EIF, EIB, EC, etc.). This initiative developed from the conclusions of the European Council meeting of 4 February 2011, which called on the European Commission to "submit proposals by the end of 2011 to establish an EU-wide venture capital program, building on the EIF and other relevant financial institutions and in cooperation with national operators." The EVFIN initiative complements the general activities of the European Private Equity and Venture Capital Association (EVCA).

Why focus on venture capital?

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o Venture capital contributes to economic competitiveness by facilitating the creation of new businesses, innovation, job creation and economic growth; It has the capacity to promote economic development;

Venture capital is particularly important for small and medium-sized enterprises (SMEs) in the EU, as it provides financing to companies with promising but unproven business models. These companies often face the greatest difficulties in accessing finance, but offer the highest potential economic benefits;

The EU's venture capital funding gap is significant compared to the United States and calls for urgent action at EU level. More targeted EU financial instruments must be designed and implemented in cooperation with national operators to attract a significant increase in private investment and improve investment efficiency. Furthermore, the creation of an EU single market for venture capital, conducive to cross-border activity, is necessary to address the main structural problem affecting this sector.

o Venture capital fund investors play a vital role in the development of venture capital markets by selecting and supporting the best emerging and proven venture capital funds across the EU.

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A crucial moment

The European venture capital market was deeply affected by the 2008 financial crisis. Its investment capacity contracted sharply, severely impacting innovative companies' access to financing. The amount raised by venture capital funds fell by 50% between 2007 and 2013. Consequently, venture capital investments in SMEs decreased by nearly 50% over the same period. Private institutional investors are withdrawing from the market at a time when Europe needs to redouble its efforts to stimulate economic growth. This threatens the survival of several high-performing venture capital management teams, particularly small, emerging ones.

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About venture capital

Venture capital is generally defined as a subset of the broader private equity asset class, which includes seed, startup, expansion, growth, buyout, bridge, and mezzanine investments. Venture capital provides long-term equity financing to unlisted companies with high growth potential to fund their startup or expansion phase. This type of investment, often taking the form of temporary equity stakes, is made by venture capital funds and carries a high level of risk, as returns are tied to the success of the newly created companies. Venture capital firms that manage such funds raise capital primarily from long-term-oriented institutional investors, such as pension funds, insurance companies, banks, family offices, and others. Institutional venture capital investment allows the investment process to be delegated to fund managers with significant experience in identifying, evaluating, and selecting potential companies with high growth potential. The fund usually has a contractually limited duration of seven or ten years.

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1 Falling from 8.3 billion euros in 2007 to 4 billion euros in 2013. Source: EVCA Yearbook 2013.

2. From €6 billion in 2006 to €3.4 billion in 2013. Source: EVCA Yearbook 2013.

About EVFIN members

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o 14 major national venture capital and private equity operators representing 12 European countries;

Mostly public, they all play a crucial role in their national country, namely promoting equity financing for SMEs at different stages of their development and supporting the best emerging venture capital funds. All have in-depth knowledge of their domestic market;

o EVFIN institutions invest primarily in venture capital and private equity funds, always in collaboration with private co-investors;

o Among the other activities of its members: - Direct investments in growth-oriented SMEs in collaboration with private investors; - Design and management of a number of equity investment vehicles (venture capital funds of funds, venture capital funds, etc.) as well as debt and guarantee programs (guarantee programs to support bank financing to businesses, etc.).

 

EVFIN operates across the EU and its members manage over €24 billion in assets. EVFIN intends to continue developing and expanding this platform to other major EU venture capital fund investors.

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Members