The European Investment Fund (EIF) is launching a new €15bn fund of funds to back growth-stage investors across the continent — the biggest of its kind.
It intends to back 100 “mid-size” funds (those aiming to close €300m-600m) and “mega funds” (of €1bn), with plans to complete a first close by this summer.
This is the second iteration of the EIF’s European Tech Champions Initiative, which was launched in 2023 in a bid to “bridge Europe’s chronic late-stage funding gap vis-à-vis the US”. That gap is estimated to be around €70bn, according to the EIF.
The new fund of funds is significantly larger in size and scope than the first, which raised €3.9bn and has backed 14 €1bn+ funds, from VC firms including Atomico, Headline and Eurazeo.
ETCI 2 is a “completely different ball game”, says Uli Grabenwarter, deputy chief investment officer at the EIF.
European Tech Champions Initiative 2
The first ETCI fund of funds was backed by the European Investment Bank (EIB) and six EU member states (Germany, France, Italy, Spain, Belgium and the Netherlands).
The second fund of funds aims to raise funding from — and back investors based in — as many EU member states as possible.
“Some markets, like Germany and France, are completely capable of nurturing mega funds,” Grabenwarter told Sifted. Other countries in the EU don’t yet have such a strong pipeline of growth-stage companies, hence the expansion of the investment criteria to include mid-size VC funds.
ETCI 2 also plans to raise funding from a far broader set of investors than ETCI 1, including institutional investors such as insurers, commercial banks and pension funds, along with its public backers. The EIF and EIB have already committed €1.25bn to the new fund of funds.
The eventual goal, says the EIF, is to unlock up to €80bn in scaleup funding in Europe as a result of the fund of funds.
It will be “complementary” to the European Commission’s planned €5bn Scaleup Europe Fund, says Grabenwarter, which will invest directly into deeptech companies in Europe. “If anything, the Scaleup Fund would be an investment target of ETCI rather than a competitor.”
ETCI 2 will invest up to €200m in funds — far greater than the average investment of €60m with ETCI 1.
A total of 40 companies have been indirectly backed by ETCI 1 as of February, including 11 unicorns such as AI translation scaleup DeepL, travel software company TravelPerk and code-free website development platform Framer.
