EU forms investors club amid tech doom and gloom
Investors are tipped to co-invest in capital-intensive tech alongside the EU's fund.
Brussels is setting up a club of “trusted” tech investors that could help with the European Union’s push to fund more high-risk tech ventures.
Since 2021, the EU executive has stepped in as a tech venture capitalist to plug the bloc’s critical technologies funding gap, which is stark compared with other regions, such as the U.S. and China. Commission President Ursula von der Leyen in July vowed to expand the program further in the coming years.
The Commission now aims to onboard other, private tech venture capital players to share the investment burden.
A network of “trusted investors” will be launched on Oct. 21 in Athens, according to three Commission officials. Those investors could be tapped to co-invest alongside the EU’s own fund.
More than 40 investors have already confirmed their participation, according to an undated presentation about the program, seen by POLITICO. Outgoing EU innovation chief Iliana Ivanova will also attend the launch, likely one of her last acts on the job.
Former Italian Prime Minister Mario Draghi raised the EU’s tech-funding gap as a key concern in his report on the EU’s competitiveness.
“Innovative digital companies are generally failing to scale up in Europe and attract finance, reflected in a huge gap in later-stage financing between the EU and the U.S.,” he wrote.
In this report, Draghi pointed out that U.S.-based artificial intelligence startups attracted 61 percent of global funding, while EU-based firms claimed only 6 percent.
Draghi’s report sparked an outcry among European tech executives, who criticized the EU’s poor efforts to drive innovation.
“The EU is part of the problem. Thus far it has mostly brought us silly cookie[s] and AI warnings,” Jitse Groen, CEO of Dutch food-delivery platform Just Eat Takeaway, said Thursday.
Groen refers to the EU’s heavy regulatory push in several technology areas, such as data protection and artificial intelligence.
“The EU could move to the bottom of the global innovation pile,” Niklas Östberg, CEO of German food-delivery platform Delivery Hero, warned if the bloc didn’t tackle issues like regulatory barriers and the funding gap.
Glad to see Draghi’s report calling out the regulatory barriers and lack of investment stifling the European scaleups’ growth story. While we are proud to be listed in Europe, the EU could move to the bottom of the global innovation pile if the new European Commission doesn’t… https://t.co/x4Bicm8TB9— Niklas Oestberg (@niklasoestberg) September 12, 2024
The Commission does not intend to become a run-of-the-mill investor that funds ordinary software applications or other consumer-focused technologies.
The focus is “deep tech,” a catch-all term for research-heavy — and, as such, capital-intensive — technologies such as quantum computing, microchips and cybersecurity.
That could raise the bar for investors to join the EU’s initiative.
Tech venture capitalists generally seek a successful — profitable — exit after a couple of years, while these more advanced technologies can take much longer to commercialize and produce results.
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