TBED Around the World: Measures Seek to Increase Venture Capital in EU, China

In an effort to increase the proliferation and participation of venture capital firms across the 28-nation European Union, changes are needed at the institutional level, according to the capital markets union plan unveiled last month. The plan, which was presented by EU Financial Services Commissioner Jonathan Hill, seeks to standardize rules across the EU, create tax incentives for venture capital investment, and create a pan-European fund-of-funds to invest public money in EU venture capital projects.              

Although the EU has yet to say how much money or which funding sources would be involved in fulfilling the capital markets union plan, funds from innovation initiatives such as the Horizon 2020 program could draw in a new class of investors, according to a report in Bloomberg Business. Horizon 2020 is the financial instrument responsible for implementing the Innovation Union, an initiative aimed at removing obstacles to innovation, revolutionizing the way public and private sectors work together, and making Europe a world-class science performer.

In China, Premier Li Keqiang announced that China will expand its preferential tax policies for firms engaged in research development in 2016. The premier also announced that, beginning in October 2015, venture capital firms investing in new technology startups for more than two years will also receive tax breaks.