Europe s venture capital market is dwarfed by that of the USA, and
Europe s employment performance continues to be disappointing. The two
phenomena are closely connected. Small and medium sized businesses find
it difficult both to get started and to grow into big companies. In a
worst case scenario, European entrepreneurs are faced with skepticism
and ignorance in the banking sector, an absence of stock options,
unreasonable legal and bureaucratic obstacles, a high cost of labour,
unhelpful government agencies and unsympathetic tax authorities. How in
these circumstances is it possible to grow global companies in Europe?
This Federal Trust Report investigates how this question might be
answered. It sets forth the findings of an eminent and wide-ranging
study group, which proceeded under the chairmanship of Sir Brian Corby.
The report examines the extent of the current integration of Europe s
capital markets and asks what measures are necessary to ensure a better
provision of venture capital. The study: * Considers how the US has
achieved its substantial concentration of capital and entrepreneurial
activity during the last two decades; * Compares the fragmented stock
markets and differentiated regulatory regimes of Europe with the
coherent, Federal-level authorities of the USA; * Examines whether the
comparative absence within the European Union of funded pensions that
could provide exit opportunities for venture capitalists is a major
weakness, and, if so, whether it can be rectified; * Examines the role
of the EU institutions, and especially that of the European Investment
Bank, which through the European Investment Fund (1994) and the European
Technology Facility (1997) has enteredthe venture capital market.*
Looks at the potential development of EASDAQ; * Examines the role of
the media, universities and regional and local authorities in creating
the right circumstances for the development of European venture
capitalism. In reporting its findings, the study group proposes
amendments EU legislation in the fields of pensions reform, financial
services, accountancy, taxation and competition policy. The report also
suggests how enhanced management expertise, and the establishment of
specialist boutiques and innovatory banks could play a wider role in
providing funds and in supporting enterprise.
