The European Commission has launched a six-point initiative to promote venture capital financing throughout the European Union.
The commission hopes that by making capital accessible to companies, Europe can help reduce the high level of unemployment affecting the continent. Unlike the US, where a large number of venture capital firms promote and support a number of small high-technology companies, obtaining finance for similar ventures in Europe is exceedingly difficult. Few companies provide venture capital to start-up firms and fewer still understand the risks or rewards associated with high-technology investment.
The six points of the initiative are:
- Promote the integration of fragmented venture-capital markets in Europe;
- Eliminate institutional and regulatory barriers to the development of venture capital markets;
- Ameliorate tax demands concerning venture capital;
- Promote the development of small-medium enterprises in the high-tech sector;
- Increase the number of entrepreneurs and qualified experts; and
- Attack cultural barriers to the creation of enterprise and risk-taking.
The council of Ministers of Finance will discuss the commission’s proposals on the 21 April.
The initiative comes at a time when US venture capital funds are looking to Europe for investment opportunities. US venture capitalists also tend to invest more in high-tech companies that their European counterparts. According to Price Waterhouse, total venture capital investments in the US reached $12.8 billion last year, 30 per cent more than 1996, with most of the increase going to high-technology firms. In the UK, $5.2 billion was invested by venture capital funds last year, but only $132 million was invested in early-stage technology companies.