Venture Capital Funds

An EU regulation introduces a European Venture Capital Funds label, also known as EuVECA, and measures to allow managers to set up and market their funds across the EU using a single set of rules. This single rulebook will permit investors to know exactly what they can expect when investing in EuVECA.

It will also enable venture capital funds to be better positioned to attract more capital commitments and expand.

To register for the EuVECA label and market their funds across the EU, managers of venture capital funds must set up a fund that:

  • invests 70% of the capital it receives from investors in supporting eligible companies, such as young and innovative SMEs;
  • provides equity or quasi-equity finance (i.e. fresh capital) to these companies;
  • does not use leverage (i.e. the fund is not indebted, because it does not invest more capital than is committed by investors).

The regulation sets out uniform quality criteria for managers of qualifying venture capital funds that wish to use the EuVECA label. These requirements cover everything from the way they organise and conduct themselves to the manner in which they inform investors about their activities and investment policies.

These managers must also register in the country where the fund is established and provide annual reports. The country where these funds are located is obliged to ensure all the regulation’s rules are respected.

As investing in venture capital funds can be risky, the regulation defines who can invest in EuVECA: professional investors and certain other categories such as high net worth individuals.

Money market funds

Regulation (EU) 2017/1131 on money market funds

It establishes European Union (EU) rules to make money market funds (MMFs)* more resilient and better able to withstand market shocks. It does so by ensuring uniform rules on prudential requirements, governance and transparency for managers of MMFs.

The legislation applies to all MMFs managed and/or marketed in the EU. There are three types of MMFs:

variable net asset value (VNAV), mainly depending on market fluctuations;
public debt constant net asset value (CNAV), which try to maintain a fixed price for each share;
low volatility net asset value (LVNAV) — a new category of MMF which can offer a fixed price under strict conditions and higher liquidity requirements.

It requires MMFs to have sufficient liquid assets to meet any sudden withdrawal of investment.

LVNAVs and CNAVs must hold at least 10% of assets that mature (i.e. to be repaid by the issuer) within 1 day and 30% that mature within 1 week.

VNAVs need to hold at least 7.5% of assets that mature within 1 day and 15% within 1 week.
It introduces rules on portfolio diversification and valuation of assets. An MMF may invest no more than:

5% of its assets in money market instruments issued by the same body;
10% of its assets in deposits made with the same credit institutions;
17.5% in other MMFs, to prevent circular investments.

The regulation sets:

a 15% limit on reverse repurchase agreements* with the same counterparty;
specific limits for covered bonds.
It prevents MMFs from receiving any financial help from other institutions, notably banks.

It also requires MMF fund managers to:

apply prudent quality assessment procedures to potential investments;
be aware of the activities of their investors;
supply the appropriate surveillance information to the relevant authorities.


The European Commission must review the legislation by 21 July 2022.

Implementing and delegated acts

Implementing Regulation (EU) 2018/708 lays down technical standards with regard to the template to be used by managers of MMFs when reporting to competent authorities, as stipulated by Article 37 of Regulation (EU) 2017/1131.
Delegated Regulation (EU) 2018/990 amends and supplements Regulation (EU) 2017/1131 with regard to simple, transparent and standardised securitisations and asset-backed commercial papers, requirements for assets received as part of reverse repurchase agreements and credit quality assessment methodologies.
Delegated Regulation (EU) 2021/1383 amends Delegated Regulation (EU) 2018/990 with regard to requirements for assets received by MMFs as part of reverse repurchase agreements.

It has applied since 21 July 2018, apart from some rules that have applied since 20 July 2017 (Articles 11(4), 15(7), 22 and 37(4)). It fully applies to funds that need to change their rules as from 21 January 2019 (Article 44).

MMFs are mainly used as an alternative to bank deposits to invest excess cash for short periods of time. They enable investors to diversify their financial holdings, while allowing them to recover these at short notice. In the EU, the funds manage assets of some €1 trillion which are used to finance the real economy.
However, market turbulence, as seen in the 2007/2008 financial crisis, and more recently in March 2020, can lead to a run on funds. If large groups of investors start to withdraw their cash, potentially others across the EU follow, damaging the financial system.
The EU legislation follows similar moves by the G20 group of industrialised countries and the Financial Stability Board to strengthen oversight and regulation of the shadow banking system.
For further information, see:
Legislative history of Regulation (EU) 2017/1131 (European Commission)
Money market funds in the EU (Council of the European Union).

Money market fund. A mutual fund issuing shares to investors to finance their activities.
Reverse repurchase agreement. Where the purchaser of securities agrees to sell them back at an agreed price on a specific date.


Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (OJ L 169, 30.6.2017, pp. 8–45).

Successive amendments to Regulation (EU) 2017/1131 have been incorporated in the original text. This consolidated version is of documentary value only.

Commission Implementing Regulation (EU) 2018/708 of 17 April 2018 laying down implementing technical standards with regard to the template to be used by managers of money market funds when reporting to competent authorities as stipulated by Article 37 of Regulation (EU) 2017/1131 of the European Parliament and of the Council (OJ L 119, 15.5.2018, pp. 5–28).

European crowdfunding service providers for business

Regulation (EU) 2020/1503 on European crowdfunding service providers for business

It sets out common rules on:

providing crowdfunding services*;
organising, authorising and supervising crowdfunding service providers;
applying transparency and marketing crowdfunding services.

Key Points

Crowdfunding service providers must:

be officially authorised;
act honestly, fairly and professionally in the best interests of their clients;
not accept any reward for routing investors’ orders to a particular crowdfunding offer;
carry out a minimum level of due diligence of project owners* seeking crowdfunding;
have in place effective and transparent procedures for the prompt, fair and consistent handling of complaints from clients;
comply with conflicts of interest requirements, such as the prohibition to invest in any offer on their own platforms;
take reasonable steps to avoid additional risk when outsourcing any functions;
comply with specific prudential safeguards;
provide national authorities annually with a confidential list of projects funded through their platform;
keep records of their services and transactions for at least 5 years.

The management body of a crowdfunding service provider must establish and oversee adequate policies and procedures to ensure effective and prudent activity.

National authorities:

vet carefully a legal person intending to provide crowdfunding services;
decide within 3 months of receiving a complete application whether to authorise or reject a prospective crowdfunding service provider;
may withdraw their authorisation for subsequent illegal behaviour or non-use of the platform for 9 successive months;
publish on their websites up-to-date information on national laws and regulations applying to crowdfunding service providers’ marketing material;
have specific investigatory powers, including on-site inspections;
cooperate and exchange information with each other and with the European Securities and Markets Authority (ESMA);
operate a complaints procedure for clients, interested parties and consumer associations;
may apply administrative penalties (in addition to a country’s right to impose criminal penalties).

ESMA must:

submit different draft regulatory technical standards to support the legislation to the European Commission by 10 November 2021 and 10 May 2022;
establish a publicly available register on its website of all crowdfunding service providers.

Measures to ensure investor protection require crowdfunding service providers to:

ensure all information and marketing material to clients is fair, clear and not misleading;
disclose annually the default rates of crowdfunding projects on their lending-based platform over at least the 3 preceding years;
publish an outcome statement within 4 months of the end of each financial year;
assess whether and which of their services would be appropriate for prospective non-professional clients (‘non-sophisticated investors’) and provide a 4-day reflection period before giving them full access to invest in crowdfunding projects;
give prospective investors a detailed key investment sheet, including a warning of possible financial loss.

The regulation does not apply to individuals using crowdfunding for personal reasons (i.e. not for their business, trade or profession) or to campaigns of over €5 million (which are regulated by Directive 2014/65/EU on better regulated and transparent financial markets (MiFiD — see summary) and Regulation 2017/1129 on prospectuses to be published when securities are issued and offered to the public (see summary).

The Commission:

has the power to adopt delegated acts;
by 10 May 2022, assesses the impact of the regulation on purely national crowdfunding services;
presents a report on implementation of the legislation to the European Parliament and to the Council before 10 November 2023.
The legislation amends Regulation (EU) 2017/1129 on prospectuses and Directive (EU) 2019/1937 on protecting individuals who report breaches of EU law (see summary).


It applies from 10 November 2021.

Crowdfunding is a form of financing directly connecting people who can give, lend or invest money with those who need funding for a specific project.
The EU-wide rules make it easier for crowdfunding platforms to develop and offer their services across national borders under a single regime. For small investors and businesses, especially start-ups, they improve access to this innovative form of finance. For investors, they provide better protection and a higher level of guarantees.
The regulation is part of the technology-enabled innovation in financial services (FinTech) action plan that the Commission presented in March 2018.
For more information, see:
Crowdfunding (European Commission).


Crowdfunding service: matching, via a crowdfunding platform, business funding interests of investors and those seeking finance. For more details, please refer to Article 2.1(a) of the regulation.
Project owner: an individual or a business seeking funding via a crowdfunding platform.


Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (OJ L 347, 20.10.2020, pp. 1-49)

Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, pp. 17-56)

Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions — FinTech Action plan: For a more competitive and innovative European financial sector (COM(2018) 109 final, 8.3.2018)

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, pp. 12-82)

Successive amendments to Regulation (EU) 2017/1129 have been incorporated into the original text. This consolidated version is of documentary value only.

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, pp. 35-127)

See consolidated version.

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Action Plan on Building a Capital Markets Union (COM(2015) 468 final, 30.9.2015)

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, pp. 349-496)

See consolidated version.

Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, pp. 84-119)

See consolidated version.

Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes (OJ L 84, 26.3.1997, pp. 22-31)


Important Notice! This website is provided for informational purposes only! It is a fundamental condition of the use of this website that no liability is accepted for any loss or damage caused by reason of any error, omission, or misstatement in its contents. 

Draft Articles; The articles on this website are in draft form and are subject to further review for typographical errors and, in some cases, updating and correction. It is intended to include references to the sources of materials and acknowledgements in the final version. The content of articles with [EU] in the title and some of the articles in the section on Agriculture are a reproduction of or are based on European or Irish public sector information.

Leave a Reply

Your email address will not be published. Required fields are marked *