European Commission consults on venture and growth capital fund reform

European Commission consults on venture and growth capital funds reform

On 15 January 2026, the European Commission (the Commission) published a targeted consultation, (the CP) in which it set out proposed reforms to the regulatory framework for venture and growth capital funds.

The CP (which is accompanied by a public consultation) is part of the EU’s savings and investments union (SIU) strategy and should be seen alongside the Commission’s Market Integration and Supervision Package (MISP), published on 4 December 2025.

The CP and the public consultation close on 12 March 2026.

Why is the Commission consulting?

The Commission recognises that Europe’s venture and growth capital funds market remains, in its words, “fragmented and narrow compared to global peers” and it has been clear for some time that the regulatory framework for EuVECAs has not worked as well as had been expected when it was launched.

The purpose of its CP is to gather feedback on what are the key obstacles EU venture and growth capital fund managers face and what policy measures can be put in place to address these.

In particular, the Commission is hoping for additional insight into whether the regulatory framework for such managers could be made more proportionate to their size, investment strategy, the risk profile and/or other characteristics, while maintaining an appropriate level of investor protection.

As the CP notes:
“[the] EU AIFM landscape comprises a broad spectrum of firms, including many specialist and mid sized managers, particularly in the venture and growth capital fund segments. While these fund managers often fall under the full scope AIFMD regime, they generally do not pose the same systemic or market risks as the largest pan European AIFMs.”

According to ESMA:

• around 3,940 EU AIF managers operate below the EUR 500 million AuM threshold
• together, sub-threshold EU AIFMs account for only 2% of the EU’s EUR 12.4 trillion AuM
• AIFMs managing assets between EUR 500 million and EUR 5 billion manage only around 8% of the EU total AuM
• 84% of total AuM within the EU alternative investment funds sector is managed by players above EUR 10 billion

As a result:

• focusing on the largest AIFs and AIFMs might allow the dominant share of the AIF market to be monitored with a relatively high accuracy
• a more proportionate regulatory framework - better adapted to small size AIF managers and mid size AIFMs and which better reflects their risk profile, investment strategy and business model - might deliver an effective means of supervision.

The EuVECA Regulation provides a framework for venture capital fund managers to market EuVECAs in the EU with lighter regulation than full scope AIFMs, provided they comply with certain requirements.

However, the regime’s provisions are generally seen to adversely affect the operation of EuVECA managers in the EU – similar considerations apply to the European Social Entrepreneurship Funds (EuSEF) Regulation, which has seen an even smaller number of funds launched.

What does the CP contain?

The CP, then, offers an opportunity to streamline the EU regulatory framework for small size AIF managers and mid sized AIFMs so these can operate more efficiently and on a broader scale across the EU single market, while ensuring a high level of investor protection, market integrity and effective supervision.

It examines how best to:

• strengthen the scalability and competitiveness of small size AIF managers and mid size AIFMs through simplification and by facilitating cross border fundraising and investment
• support bigger ticket investments into the EU real economy, including scaleups and infrastructure projects, notably in a cross border context
• support the emergence of larger and more competitive EU venture and growth capital fund managers, capable of operating at a regional, European and global scale
• ensure effective and proportionate regulation, particularly for small size AIF managers and mid size AIFMs

For the purposes of the CP:

• ‘small size AIF managers’ are EU venture and growth capital fund managers with AuM below EUR 500 million
• ‘mid size AIFMs’ are AIFMD licensed EU venture and growth capital fund managers with AuM between EUR 500 million and ‘several billion Euros’

Its questions are divided into the following sections:

1 General assessment
2 Assessment and calibration of the AIFMD threshold(s)
3 Small-size AIF managers managing less than EUR 500 million in AUM
4 Proportional requirements for mid-size EU venture and growth capital fund managers managing more than EUR 500 million in AuM
5 Functioning of the EuVECA and EuSEF frameworks