[Issue 2] Article 1: The Evolution and Regulation of Venture Capital Funds in Europe

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Erik P.M. VERMEULEN, Tilburg University
Diogo Pereira Dias NUNES, Tilburg University

Venture capital drives innovation, economic growth and job creation.  It is therefore not surprising that ‘venture capital’ is an important theme in the legal and regulatory reforms that have gained momentum in the wake of the recent financial crisis. Clearly, the economic downturn had (and still has) a severe impact on the venture capital industry. What can be done to stimulate venture capital investments and make it better and more accessible to emerging growth companies? Policymakers and regulators are convinced that regulatory interventions should aim at creating a virtuous ‘venture capital cycle’ by (1) boosting venture capital fundraising (particularly from institutional investors), (2) promoting venture capital and other risk capital investments in promising, mostly early-stage growth companies, and (3) encouraging access to capital markets in order to improve liquidity and exit opportunities that enable venture capital funds to return capital to their investors.