What are EuVECA Funds?

EuVECA funds are the abbreviated name of European Venture Capital Funds. In the Polish version of Regulation 345/2013 on European Venture Capital Funds (the “Regulation”), EuVECA funds are referred to as qualifying venture capital funds. Venture capital funds are funds acting as business angels that provide funding to companies that are generally very small, that are in the early stages of business development and that show a high potential for growth and development. Moreover, venture capital funds provide companies with valuable expertise and experience, business contacts, brand value and strategic advice. But how do EuVECA funds differ from other venture capital funds? Which entities can use the EuVECA name?

Criteria to qualify as an EuSEF fund

Pursuant to the Regulation, a qualifying venture capital fund means a collective investment undertaking which:

  • intends to invest at least 70 per cent of the aggregate value of its capital contributions received and uncalled committed capital in assets that constitute eligible investments, determined against the amounts that can be invested after deduction of all reasonable costs and cash and cash equivalents held, within the time frame specified in its by-laws or instruments of incorporation;
  • shall not use more than 30 per cent of the total value of its capital contributions received and uncalled capital pledged to acquire assets other than eligible investments, determined against the amounts that can be invested after deduction of all reasonable costs and cash and cash equivalents held;
  • has been established in a Member State.

The above definition indicates that EuVECA funds are categorised as alternative investment funds.

What can EuSEF funds invest in?

The regulation stipulates that at least 70% of the total value of funds received from investors must be allocated to so-called eligible investments. Eligible investments are mainly considered to be:

(a) equity instruments, quasi-equity instruments, debt instruments, issued by an elligible portfolio undertaking;

(b) units or shares in one or more other elligible venture capital funds;

(c) loans granted to an elligible portfolio undertaking;

(d) shareholdings in an elligible portfolio undertaking.

Portfolio companies of EuVECA funds

The types of instruments invested by EuVECA funds do not differ from those acquired by other venture capital funds. The difference between EuVECA funds and other venture capital funds lies in the entities that are the object of such a fund’s investment. The Regulation lists a number of conditions that an entity (‘eligible portfolio undertaking’) must meet in order to receive financial support from EuVECA funds. Support may be granted to an entity that:

(a) meets one of the following conditions at the time of its first investment:

  • the entity is not admitted to trading on a regulated market or a multilateral trading facility (MTF), as defined in Article 4(1)(14) and (15) of Directive 2004/39/EC;
  • the entity is a small and medium-sized enterprise as defined in Article 4(1)(13) of Directive 2014/65/EU which is listed on an SME development market as defined in Article 4(1)(12) of that Directive.

(b) the entity is not a collective investment undertaking;

(c) is not one of the following:

  • a credit institution as defined in Article 4(1) of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions;
  • investment firm as defined in Article 4(1)(1) of Directive 2004/39/EC;
  • insurance undertaking as defined in Article 13(1) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II);
  • a financial holding company as defined in Article 4(19) of Directive 2006/48/EC;
  • a mixed-activity holding company as defined in Article 4(20) of Directive 2006/48/EC;

(d) it is established on the territory of a Member State or a third country, provided that the third country:

  • is not classified by the Financial Action Task Force as a non-cooperative country or territory;
  • has concluded an agreement with the home Member State of the eligible venture capital fund manager and each of the other Member States where it intends to market the units or shares of the eligible venture capital fund, in order to ensure that the third country fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information on tax matters, including any multilateral tax agreements.

The above conditions imply that the main objective of the investments made by EuVECA funds is to support promising small and medium-sized entrepreneurs who plan to grow, but do not have adequate capital, experience or business contacts. The specialised requirements regarding the eligible portfolio companies in which EuVECA funds may invest and the investment instruments they are to use during these investments clearly distinguish these funds from traditional alternative investment funds, which use other, less specialised investment strategies.

Who can participate in the EuVECA fund?

EuVECA funds are investments with a higher investment risk. Hence, the EuVECA Fund may only market units and shares of eligible venture capital funds to investors who are considered to be professional clients or who, on request, may be treated as professional clients (subject to certain conditions) or to other investors who:

(a) have committed to invest at least EUR 100,000; and

(b) have declared in writing, in a document separate from the contract to be concluded, the object of which is to commit the investment, that they are aware of the risks associated with the envisaged commitment.

Nonetheless, the above restrictions do not apply to investments made by officers, directors or employees participating in the management of an EuVECA fund manager investing in the EuVECA funds it manages.

Who can use the name EuVECA?

Managers of eligible venture capital funds that comply with the requirements of Chapter II of the Regulation are entitled to use the designation “EuVECA”. The name may be used by them for the marketing of eligible venture capital funds in the Union. An eligible venture capital fund may be managed both externally and internally. Where an eligible venture capital fund is managed internally, the fund is also the manager and uses the name EuVECA. Conversely, where an eligible venture capital fund is externally managed, all eligible venture capital funds managed by the manager are entitled to use the EuVECA name.


EuVECA funds are very popular with investors from the European Union and the UK. Data from the register maintained by ESMA (available at: shows that there are currently 837 EuVECA funds in the European Union and the UK (as at 06.03.2023). Interestingly, none of the EuVECA funds are registered in Poland. The Żyglicka & Partners law firm is currently representing the first Polish EuVECA fund manager in the registration process. We hope that the launch of the first EuVECA fund registered in Poland will encourage other investors to join this form of investment.

EuVECA funds are a good form of investment addressing investors who focus their interest around start-ups offering innovative products, technologies and services. The established limit of assets managed by the EuVECA fund manager to a maximum of 500 million makes this institution dedicated mainly to smaller investors who do not have such large assets to compete with the largest players on the European investment markets. However, the greatest advantage of the EuVECA funds is their international character, which allows the managers to dynamically develop the venture capital structure throughout the European Union.


Maciej Marzec

Trainee Attorney at Law, Certified ATS Advisor

Maciej Marzec