The European Union is setting up an initiative to boost equity investments and prevent its most promising high-tech companies from being bought out by foreign investors once they become successful.
The initiative started one year ago when France proposed it while hosting the rotating presidency of the EU Council, with the support of Germany, Denmark, Estonia, Greece, Spain, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Austria, Portugal, Romania, Finland, and Sweden.At the time, the joint declaration mentioned the ambition to create a €10 billion pan-European Scale-Up Initiative to funnel equity investments into European scale-ups.
The initial money pot will be worth €3.75 billion, but its size is expected to increase over time. After a three-year-long pilot phase, the ETCI might be open to private investors.The ETCI will not finance scale-ups directly; it is rather intended as a ‘fund of funds’. In other words, it will boost the financial capacity of existing European large-scale venture capital funds without crowding out private investments. France, Germany, and Spain will provide €1 billion each, financing 80% of the initial sum. The European Investment Bank will provide €500 million, whilst Italy will provide €150 million and Belgium €100 million.