Public & Academic/Policy & Regulation/News/ European Commission makes its first equity investments into startups The European Commission has made direct equity investments into 42 startups from around the continent By Freya Pratty 6 January 2021 \Public & Academic I’m a proud Tech Nation visa holder — and I’m concerned about the future of UK tech By Rayan Dawud 2 February 2023 Public & Academic/Policy & Regulation/News/ European Commission makes its first equity investments into startups The European Commission has made direct equity investments into 42 startups from around the continent By Freya Pratty 6 January 2021 The European Commission has made its first direct equity investments into startups — backing 42 companies from around Europe — in an attempt to plug the funding gap and boost innovation on the continent. Under the new European Innovation Council Fund, each of the companies will receive between €500,000 and €15m, with €178m invested overall. The companies span a range of sectors, including health, circular economy and advanced manufacturing. This is the first time the Commission has made direct equity investments — with ownership stakes expected to range from 10% to 25%. A senior commission official told reporters that the move marks a “paradigm shift” for European funding, away from grants, and is aimed at helping companies compete with their American and Asian counterparts. Europe generates an impressive number of startups, he explained, something that’s exemplified through the research output of universities and the number of Nobel prizes awarded to European research. However, the number of European unicorns is limited and the VC market is three to four times smaller than in the US, the official said, demonstrating the need to boost the funding landscape in Europe. “Europe has many innovative, talented startups, but too often these companies remain small or relocate elsewhere,” said Mariya Gabriel, commissioner for innovation, research, culture, education and youth. French company CorWave, which works on patient care for people with life-threatening heart failure, was the first to receive the investment. The company received €15m from the EIC fund and has gone on to raise €35m in total by combining the funding with private investment. The case demonstrates the Commission’s aim to encourage private investment into companies alongside public European funding, a senior official explained. The aim of the funding is to encourage private investors to join them in backing companies by de risking investments, particularly for deeptech companies where returns are on a longer term basis than other startups. Among the other companies to receive investment are Hiber, a Dutch company building international satellite and communication systems, French company Xsun, which designs energy-independent drones to be fully autonomous so they can operate without any human intervention and Irish startup Geowox that provides automated property valuations. There are currently 117 companies in the pipeline to also receive direct equity investment, pending a due diligence process. Freya Pratty covers news at Sifted. She tweets from @FPratty Related Articles Voi under attack from Swedish agency after scooter death By Mimi Billing Click here to read more The UK should learn from France’s tech visa By Russ Shaw Click here to read more Cities need to deliver more effective e-scooter regulation By Fredrik Hjelm Click here to read more Ending the app trap: why (and how) we need to reform the gig economy By Catherine Miller Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? Sifted tried it out 2 \Venture Capital VC diversity needs to change — and white men need to take responsibility 3 \Venture Capital New €3.75bn European Investment Fund pot to back late-stage VCs 4 \Sustainability Counteract closes £15m fund for carbon removal solutions 5 \Mobility Was the $5bn that VCs plugged into escooters worth it?