The European Union has announced it will back a Pan-European Venture Capital Funds-of-Funds programme, known as VentureEU, to boost investment in start-up and scale-up companies across Europe.

The EU itself will only be providing €410 million of the total amount, which will be raised from other private and public sources. The VentureEU fund will invest in six venture capital fund of funds, which is hoped to raise a total of €6.5 billion, double the amount of capital investment which is available currently according to the European Commission.

“In venture capital, size matters!” said Commission Vice-President Jyrki Katainen. “With VentureEU, Europe’s many innovative entrepreneurs will soon get the investment they need to innovate and grow into global success stories. This means more jobs and growth in Europe.”

The worry here is about the ability to scale and for European organizations to compete with the US technology machine. While start-ups and smaller scale organizations in the US have access to a huge number of options, the same cannot be said in Europe. The EC claims across 2016 €39.4 billion was invested by venture capitalists, compared to a miserly €6.5 billion in Europe. The difference in growth can also be seen in the number of companies which reached ‘unicorn’ status (valuation of $1 billion) across 2017, with the 26 in Europe being dwarfed by the 109 in the US.

The EU will provide the first lump sum of €410 million, which will be made up of €67 million from the European Investment Fund, €200 million from the Horizon 2020 InnovFin Equity, €105 million from COSME and €105 million from the European Fund for Strategic Investments. The hope is that 1500 start-ups and scale-ups will benefit from the fund.

While this is a positive move from the European Commission, you can’t argue with the numbers. US companies do have access to investment because there are more investment funds out there. Even if targets are met, there is still much more opportunity to access a wider breadth of investors and bigger lump sums of investment. We don’t want to be a buzzkill, but this sum is only a drop in the ocean from what will be needed should Europe want to remain relevant in the digital economy.