Startups Want EU to Set Up $118 Billion Sovereign Tech Fund

Some of Europe’s biggest tech companies are calling for a 100 billion-euro ($118 billion) fund to kick-start the creation of regional champions in green technology, science-driven startups and other new industries.

The leaders of around 35 unicorns and startups including Blablacar, FacilityLive and Cabify will call for the European Sovereign Tech Fund at an online meeting with the European Union’s Research and Innovation Commissioner Mariya Gabriel on Tuesday. Adyen NV, Collibra SA and Supercell are also expected to participate.

The sheer scale of the world’s biggest tech companies makes it easy for them to buy out potential disruptors, tighten their grip over industries and dominate the digital agenda, the founders wrote in the document.

“This presents a risk to growth, jobs and Europe’s influence in key strategic areas,” they said.

A spokesman for the European Commission declined to comment.

The fund would combine public and private money and take the form of long-term equity investments. Some of the founders may invest some of their personal wealth in the fund, according to the document. Details of the proposal may still change ahead of the meeting.

Europe’s few successful homegrown startups have often had to turn to the U.S. in search of scale. Stockholm-based Spotify Technology SA chose to list in New York in 2018, while Booking.com was founded in the Netherlands but later sold to an American company now known as Booking Holdings Inc. Software company UiPath Inc. was founded in Romania but is now headquartered in New York and last week applied to publicly list on the New York Stock Exchange.

EU officials toyed with creating a pan-European sovereign wealth fund to invest in strategic industries in recent years, before the pandemic pushed the idea down the agenda. The latest call coincides with a shift in the EU’s focus, from curtailing the reach of U.S. tech giants through regulation to finding home-grown opportunities to reduce Europe’s dependence on U.S. and Asian technology.

The bloc has begun to make equity investments via a 3 billion-euro venture capital fund for early-stage startups that use cutting-edge science and engineering. It’s also laying the groundwork to develop and manufacture the world’s most advanced semiconductors by 2030.

The meeting on Tuesday will help to craft a Next Innovation EU policy, as the EU looks beyond its role of regulating competition and lowering trade barriers to take a more assertive approach to defending the region’s economic interests.

The tech founders want the bloc to push through measures that support a transition to a greener economy and take the lead on digital innovation in health, education and more experimental technologies. They also want more help to turn the region’s tech startups into global tech giants, according to the document.

The startups are also considering a European Sovereign Green Fund with a similar structure to the proposed sovereign tech fund, but focusing on green tech and capital-intensive ventures.

©2021 Bloomberg L.P.

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