Commission's Cresson launches 7.5 million Ecu high-tech venture capital boost

Brussels, 1-7-1997 European Commission said it is unveiling a 7.5 million Ecu scheme to help the EU match the U.S.'s world-beating high- tech venture capital industry by training venture capital fund managers to improve their performance.

EU research commissioner Edith Cresson said the commission will channel cash to new venture capital funds specialising in early stage high-tech investment for use in management costs and educating and training of fund managers.

'Venture capital is a difficult business that means combining capital with expertise. Sometimes expertise is more scarce than capital,' Cresson said.

'The commission can support the very important personal and management qualities that will make venture capital a success,' she said.

Europe needs to mobilise a skilled venture capital sector to support its IT and biotechnology industries which she said 'lag behind those in Japan and the U.S.'.

'Europe just can't sit back and concentrate on classical technologies and industries. We have enormous capacities in IT and in bio-technology, but we have to arm these industries to enable them to fight,' she said.

Under this "I-Tec" scheme, the commission will contribute up to 50 pct of the costs of initial appraisal and hands-on management of such investments, Cresson said.

The maximum I-Tec contribution will be 5 percent of the total of a fund, with a 500,000 Ecu ceiling.

Funds must invest at least 25 percent of their newly raised capital in early stage investments in "technologically innovative" small and medium sized companies (500 employees or less) - seen as a key engine of growth in unemployment-hit Europe.

Cresson said the EU's Luxembourg-based European Investment Fund will advise her on which venture capital funds to back with the 7.5 million Ecu cash - but the final decision rests with the commissioner.

EIF president Thomas Oursin said: 'The commissioner has the money. She can commit these funds to schemes that we propose. There will be no national bias. We have proposals from all parts of the EU.'

Oursin said the EIF began its own 75 million Ecu two year programme to finance early stage venture capital funds specialising in the high-tech sector since last October. So far it has ploughed 17 million Ecu into six funds across the EU, he said.

'The EIF takes a minority stake of 10-15 pct in a fund. If the EIF has 75 million ecu of capital then the funds we back would be worth a volume of 750 mln ecu,' he said.

'Into this would go the 7.5 million Ecu for management and education and so on. We expect 2-3 percent of the volumes of a venture fund being funded in this way. This is between one third and a half of management costs of a fund,' he said.

Peter Chapman