November 29, 2023

Why hasn't EIF announced a single investment from its €3.75bn fund of funds yet?

The EIF hasn’t announced a single investment yet — and some critics worry that it’s because there’s not enough €1bn funds in Europe to back

It’s been nearly 10 months since the European Investment Fund (EIF) launched a €3.75bn pot to back growth funds investing in European scaleups — but not a single deal has been announced yet. 

Dubbed the European Tech Champions Initiative (ECTI), the fund of funds — which is financed by the European Investment Bank, and the governments of Germany, France, Spain, Italy and Belgium — was launched to invest in VCs raising funds of €1bn or more that would be able to back European “tech champions” in Series B rounds and above.

Now some VCs and ecosystem stakeholders worry that, especially during the economic slowdown, the €1bn bar is too high for European investors, who tend to raise smaller funds — and that, as a result, the ECTI’s money will go to the wrong kind of funds.


So far, at least three investors have been selected as candidates to receive ECTI funds — French firms Eurazeo and Keensight Capital, and London-HQed Atomico, several sources have told Sifted. Sifted reached out to all of the investors for more information, but they declined to comment.  

The EIF’s head of technology investment Bjorn Tremmerie says the programme has “a serious pipeline” and has already approved almost €1bn of investments — but he can’t disclose any names.

Is €1bn too much?

For years, Europe has lacked local investors capable of writing big cheques for late-stage scaleups — and instead foreign, mostly American, investors have stepped in. 

From the start of 2021 until May 2022, more than 280 European tech companies raised megarounds of €100m or more, but 67% of capital raised came from non-European investors, according to the European Investment Bank (EIB). 

This means that European scaleups are heavily reliant on foreign VCs’ willingness to keep investing in the continent — but also that the value generated by those companies as they grow largely ends up in the pockets of investors outside of Europe.

“We're basically becoming the incubator of the world, [we’re] not keeping our champions here,” Tremmerie says.

“We're dependent on non-European sources of funding… In current more delicate times, that money could go back to their home countries, because it's safer, more comfortable now to invest at home. And we don't have a tool in place to lead the growth rounds of European tech champions.” 

The ECTI was set up to counter that; it aims to support 10-15 funds raising €1bn or more, which can comfortably participate in larger funding rounds of more than €50m. The fund of funds will contribute tickets of €200m on average.

But there is skepticism that this is a realistic goal.

“It isn’t well calibrated,” says Maya Noël, director of European startup and investor lobby France Digitale. “It targets a category of funds that doesn’t really exist…. You need €1bn AUM, and there aren’t many funds that have that in Europe.”

“If there were many funds [of that size], the product wouldn't be needed, would it?” Tremmerie quips. “We're creating a product because we see that there's a gap.”


He says that the EIF has “a very advanced work in progress” in Germany and France, and it’s working on deals in Spain, Italy and Belgium. 

“It is not that it's impossible — it can be done,” he adds. “If you think that you can comfortably raise €500m, €600m, €700m, but you're falling short to reach a target of ideally €1bn, we will give you the tools to reach that target.”

VC or PE? 

If Noël is right and there aren’t enough €1bn funds in Europe, some worry that ECTI will invest in private equity funds — which are usually larger — rather than traditional VCs. 

It’s already happened. Paris-based Keensight Capital, a growth buyout investor that focuses on technology and healthcare, has secured funding from the ECTI as part of a €2.8bn fundraise closed earlier this year, according to three sources with direct knowledge of the investment.

Keensight does not have a VC strategy and only invests in profitable companies. The investor was selected for the programme because it backs high-growth companies in Europe, which aligns with the fund of funds’ objective, sources say. Similar deals with firms that are not traditional VCs are expected in the future, according to two people familiar with the matter.

Keensight Capital declined to comment.

Tremmerie says that the EIF’s focus is “mainly VCs”. “We're not going to invest in private equity and buyout funds... unless there's a really strong tech component.”

He adds that there are numerous foreign funds, operating on the border between VC and PE, that currently invest in growth companies in Europe — and he feels the EIF should support the homegrown ones. 

“If we invest in buyout funds, the value creation needs to come from the underlying company's growth, meaning EBITDA growth, sales growth, profitability growth, expanding the company so that it warrants a higher exit multiple EBITDA-wise. The financial return should not come from financial engineering, on average. That's a golden rule.”

Parachuters from abroad

One other worry is that part of the money will go to non-European VCs that commit to investing in Europe — by opening a new headquarters within the EU, or by investing in European startups. Critics say that such an approach, while beneficial for startups, wouldn’t help the European homegrown venture scene. 

That’s the case with London-HQd Atomico, which may be receiving ECTI money under the condition that the funding is invested in EU startups, according to one source.

Atomico hasn’t replied to a request for a comment. 

France Digitale says that backing investors outside of the EU is counterproductive — and stands as further proof that the €1bn AUM threshold is not adapted to the reality of the European ecosystem.

Tremmerie says he can’t comment on particular cases and adds that it’s not the EIF’s intention to back foreign funds even if they tick all the boxes to be eligible for funding. 

“There are many non-European funds already investing in the European market. But it's not coming from a European perspective,” Tremmerie says. “We just want to make sure that we're not dependent only on non-European money.”

Daphné Leprince-Ringuet

Daphné Leprince-Ringuet is a reporter for Sifted based in Paris and covering French tech. You can find her on X and LinkedIn

Zosia Wanat

Zosia Wanat is a senior reporter at Sifted. She covers the CEE region and policy. Follow her on X and LinkedIn