On Thursday 24 October 2019, the European Court of Auditors (ECA) will publish a special report on the EU’s centrally managed interventions for venture capital.
The auditors examined six venture capital interventions the European Commission set up since 1998 in the area of enterprise, industry and research, including the EU guarantee for EFSI’s SME window. They assessed whether the Commission made good use of its instruments, whether the European Investment Fund (EIF) – which manages the EU-backed venture capital interventions on behalf of the Commission – implemented them properly and whether they mobilised funds from public and private investors.
The report is expected to acknowledge the significant funding the EU provides to venture capital funds, but point to the need for more direction and support of less developed markets and sectors. The auditors are expected to make a number of recommendations to the Commission, including to develop a comprehensive investment strategy and streamline the management of EU-backed interventions.
Venture capital is a catalyst for innovation, jobs and growth. For over 20 years, the Commission has been providing SMEs with venture capital to help get their businesses off the ground. Through the EIF, it made available €1.7 billion in 140 funds, of which over half has already been paid out to companies. By 2022, the Commission is due to have allocated more than €3.3 billion to venture capital investments since 2014.
Since 2012 there has been a continuous increase in fundraising by EU-backed venture capital funds, which reached a ten-year peak of €11.4 billion in 2018. The current level exceeds the pre-crisis level in 2007. France and Italy had the highest number of EU-backed venture capital funds in mid-2018.
The ECA’s special reports set out the results of its audits of EU policies and programmes or management topics related to specific budgetary areas. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks to performance or compliance, the level of income or spending involved, forthcoming developments and political and public interest.