EU Policy

Policymakers across the EU have long recognised the value of private equity and venture capital as a form of long term investment in companies. The past ten years have seen a raft of proactive policies to support financing for SMEs and innovation, for example, often harnessing the venture capital business model.

At the same time, the general sweep of regulatory review following the financial crisis has encompassed all financial market players, whether or not they were responsible for the crisis. Great care must be taken not to damage those investors that provide life giving finance to European companies, from those at seed and start-up stage, to entrepreneurial growth businesses, and mature companies in need of a focused and committed shareholder.

Innovation policy
Innovation has been identified at both EU and national level as the solution to restoring Europe’s competitiveness. As a result it is at the heart of EU policy. A key component of this is the future of financial instruments to support innovation, including venture capital and its role in an innovation policy.

Proposed AIFM Directive
In April 2009 the European Commission published a proposal for a Directive on Alternative Investment Fund Managers (AIFM).

This is sometimes refered to as the Hedge Fund Directive, but it also encompasses other types of investors, including private equity and venture capital. This is important because it will have serious consequences in the real economy in terms of financing for innovation and entrepreneurialism.

It will also impose unnecessary burdens on pension fund and other investors in private equity and venture capital.