EU to create $ 3.9 billion fund for startups in Death Valley

The European Union will create a fund for investments in recently launched startups, which so far do not earn themselves and are in dire need of funding for their development. 

So he intends to help emerging technology companies get out of the infamous Death Valley.

The EU intends to create a € 3.5 billion ($ 3.9 billion) fund to support technology startups that have yet to emerge from the Death Valley, Bloomberg writes. 

The fund will invest in startups in the early stages when it is difficult for them to attract traditional venture financing, but they need to carry out expensive and risky research in order to turn their designs into a viable product, said Jean-Eric Paket, director of research and innovation at the European Commission. 

This is the “famous death valley of innovation,» he said, stressing that the fund will seek to bridge this investment gap by providing startups with equity or grants.

According to Pake, the fund will support new startups working in high-tech industries, such as those involved in biotechnology and artificial intelligence. It is planned to launch the fund in 2021. 

It will be managed by the European Innovation Council. The final size of the fund is planned to be determined by the results of negotiations of the EU member states, the agency notes.

So far, the EU has launched a fund pilot project, Pak said. At the first stage, its size will be € 600 million. By the end of the year, the fund should decide on support from 50 to 100 projects.

Two tricks: how a startup can go through the «Valley of Death»

Now the European Union is investing in technology companies through grants from the European Commission and through the European Investment Fund, but it does not have the right to make high-risk investments.

According to Atomico venture capital firm, investment in European companies this year rose to $ 34.3 billion from $ 15.3 billion in 2015. Bloomberg explains that EU venture capital is growing as European startups develop, and a trade war between China and the US is pushing investors to look for alternatives to these two technology centers.

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