EU seeks fund manager for new venture capital investment vehicle

The European Commission is looking for managers for a new type of investment vehicle, a fund of funds, as it looks to draw more capital to promising technology companies.

Interested experts can apply via the European Investment Fund’s website before January 31.

Inspired by a similar initiative in Canada, the fund of funds aims to attract banks and pension funds to invest alongside member states, in a large public-private pot.

The Commission will provide cornerstone investments of up to €300 million in one or more fund of funds, with money drawn from its current research programme, Horizon 2020, the European Fund for Strategic Investments and COSME.

Once the Commission picks an experienced investor to manage the fund, there will be an 18 month window to raise at least three times as much from other sources, the Commission said.

The goal of the new vehicle is to make VC funds across Europe bigger on average, and so more attractive to pension funds, sovereign wealth funds and academic endowments.

The US VC market is five times bigger than the EU’s.

"There's far less venture capital in Europe than in the US, and funds don't have the scale or geographic scope to grow companies from early stage to mid-cap and from mid-cap to global players,” said EU Commissioner for Research, Science and Innovation Carlos Moedas.

“The [fund of funds] tackles this problem head-on. It will lead to higher levels of investment in new generations of highly innovative European firms,” he said.

Fund of funds have some disadvantages however, such as a double fee structure, and historically lower performance returns.