The European Union (EU) has launched a venture capital fund of 400 million euros ($442 million) aimed at helping regional start-ups grow.
The funding, announced on Tuesday, is set to address a capital shortage in Europe for such firms compared with the United States, according to reports in Reuters.
The EU will supposedly come up with 25 percent of the total funding and will seek to secure interest from private investors to put in up to three times more funding. If the interest is there, the overall size of the fund could top up at 1.6 billion euros ($1.8 billion), according to Carlos Moedas, European commissioner for research, science and innovation.
Moedas was speaking to an audience, including Reuters, at the Web Summit being held in Lisbon, one of Europe’s biggest venues for tech start-ups.
“In Europe we have a problem – companies are created and are then bought by venture capital funds from other parts of the world,” Moedas told reporters. “So the idea is to create a fund to allow them to be created in Europe and then stay in Europe.”
He also said there is no shortage of new companies created in Europe, but the problem is to scale them up, or finance growth after the initial phase.
The Commission of the European Union is inviting fund managers to apply to lead the new venture capital fund with a deadline for applications of Jan. 31, 2017.
Related: London is the European capital for IoT start-ups
European Union funding for start-ups
This is the latest in a series of investments in IoT by the European Union. On October 1st, the IoT-European Platforms Initiative (IoT-EPI) launched the first of ten open calls to support IoT in Europe. The investment ensures that more than 100 projects will receive technology support and funding in the range of €30,000-€150,000 ($33,000-$168,000) each.
At the same time, the EU has also been implementing regulation – notably the EU General Data Protection Regulation (GDPR) and the EU Digital Single Market (DSM) – which some experts feel could stifle business in the Common Market.
While the UK may not be affected by these regulations following the vote to leave the EU, it will be interesting to see the extent to which this investment enables the EU to produce the next strong IoT start-up.
Related: Will European regulation put the brakes on IoT adoption?