FRANCE INVEST
France Invest is the association representing venture capital, private equity, and infrastructure firms in France.
Lobbying Activity
Meeting with Martin Merlin (Director Financial Stability, Financial Services and Capital Markets Union)
16 Jan 2026 · Exchange on venture and growth capital, capital markets integration
Meeting with Maria Cristina Russo (Deputy Director-General Research and Innovation)
16 Jan 2026 · Key European initiatives in the investment sector, in particular the Scaleup Europe Fund and the European Innovation Investment Pact
Meeting with Pascal Canfin (Member of the European Parliament)
9 Dec 2025 · SFDR
Meeting with Pascal Canfin (Member of the European Parliament)
3 Nov 2025 · SFDR
Response to General revision of the General Block Exemption Regulation
2 Oct 2025
Conditions to access State aid are particularly important for EU start-ups, scale-ups and more generally innovative companies and for Europe to achieve its ambitions, in particular in terms of digital transformation and climate change. It is of utmost importance to ensure that European innovative companies can find financing in the EU and fully benefit from risk finance aid measures. EU rules on State aid should not discourage private market players from co-investing in innovative projects with public operators. More specifically, the EU rules governing access to risk financing should not deter EU companies from looking for financing in the EU and not lead them to turn to non-EU funding. The development of EU unicorns and EU champions depends on their ability to find in the EU the financial means they need to grow. In this context, France Invest welcomes the Commissions consultation on the GBER. In particular, we would like to take this opportunity to reiterate our urgent call for a revision of the current definition of SMEs. Indeed, as recognised by the European Commission (Recommendation 2003/361/EC of 6 May 2003), the current definition of SMEs in the GBER prevents businesses which receive majority ownership from a venture capital company to be eligible to this status. In other words, under the current rules, SMEs are forced to choose between accessing public innovation support and attracting private financing from the market. We expect that the revised Regulation, together with the Risk Finance Guidelines which were updated in 2022, will simplify the rules and introduce additional flexibility to conditions to access Sate aid, thus facilitating the deployment of State aid schemes and limiting competition distortions to the minimum. Our key points concern: - the definition of beneficiaries (SMEs, companies in difficulty, innovative companies, etc.); - a relaxation of investment rules (follow-on investments, replacement capital, first loss pieces, etc.); - greater consistency in regulations (definition of first loss pieces and small mid-caps, transitional provisions, etc.).
Read full responseMeeting with Helene Bussieres (Head of Unit Financial Stability, Financial Services and Capital Markets Union)
15 Sept 2025 · Exchange of views on the review of the SFDR and the SIU
France Invest urges inclusion of private equity in EU savings
8 Jul 2025
Topic — This consultation seeks to create a European blueprint for retail savings and investment products.
Message — The organization requests that private equity funds and unlisted instruments become eligible for the new savings accounts. They advocate for a minimum 70% European investment threshold and compelling tax incentives for savers.123
Why — This would significantly expand the retail investor base and capital available for private equity managers.4
France Invest urges tailored disclosure rules for unlisted funds
27 May 2025
Topic — Review of EU sustainable finance disclosure rules to improve usability and prevent greenwashing.
Message — France Invest requests a product categorization system adapted to the operating model of non-listed funds. They propose a 'transformation' category to better reflect digital, environmental, and social transitions.12
Why — Tailored requirements would ensure non-listed funds remain identifiable and attractive to investors.3
Impact — Investors currently suffer from fragmented interpretations that make comparing different financial products nearly impossible.4
Response to EU Start-up and Scale-up Strategy
12 Mar 2025
France Invest welcomes the opportunity to contribute to the EUs startup and scaleup strategy. Our members, including venture capital (VC) and private equity (PE) firms, play a critical role in financing, advising and supporting startups and high-growth companies. As of 2023, France Invests venture & growth segment comprised 189 firms, supporting 3,663 startups and scaleups, employing 122,000 people. Although the French VC ecosystem has grown significantly since 2016, it still lags behind in large financing deals, representing under 30% of total funding. Between 2016 and 2023, France Invests members raised 32.2 billion for tech and biotech companies and invested 22.5 billion annually across 1,018 transactions. However, from 2022, fundraising became more challenging, particularly for large-scale growth investments. France Invest agrees with the Commissions identification of key hurdles: access to finance, regulatory and bureaucratic burdens, access to markets and talent, infrastructure, knowledge, and services. Additionally, we would like to highlight the discriminatory treatment of VC/PE-backed startups under EU law. Startups receiving VC/PE investments can lose SME status, making them ineligible for public support, tax benefits, and lower social charges. We would like to put forward the following recommendations for EU policy: 1. Revising the SME definition & ensuring equal treatment for VC/PE-backed startups The current SME definition should be revised to ensure that VC/PE-backed startups remain eligible for public support. The autonomy criteria under EU law should be modified to prevent unfair exclusion of VC/PE-backed firms from SME benefits. 2. Developing a comprehensive EU venture & growth capital ecosystem Reform the EuVECA Regulation to make it more attractive to investors and managers, expand eligible assets and improve fundraising mechanisms. Improve access to savings & investment products by creating an EU-wide savings label for investment in European startups. Enhance IP protection to increase investment attractiveness. Promote corporate venture capital investment by incentivizing corporations to participate in VC funds. Introduce incentives to attract and retain talent in startups and scaleups. 3. Creating an enabling environment for fundraising & investment and establish a true Savings and Investment Union Encourage cross-border investments by harmonizing regulations and make foreign direct investment (FDI) rules more transparent. Attract retail investors by expanding financial literacy initiatives and reducing barriers for smaller investors. Support institutional investors by easing prudential requirements and encouraging pension funds and life insurance allocations to VC/PE funds. Encourage Member States to introduce fiscal incentives for investors who invest in startups and scaleups, a guarantee of priority reimbursement and return for private investors supporting innovative projects and schemes such as the Tibi initiative. Enhance the EUs financial & regulatory framework, for instance, harmonize insolvency laws and establish a "28th regime". In conclusion, France Invest urges the European Commission to unlock the full potential of EU VC and PE, ensuring startups and scaleups receive the financial support the need. A more inclusive SME definition, simplified regulations, and incentives for investment and talent retention will foster a stronger European startup/scaleup ecosystem. We are available for further discussion and remain at the Commission's disposal for any additional information.
Read full responseResponse to Savings and Investments Union
6 Mar 2025
France Invest would like to thank the Commission for the opportunity to contribute to its call for evidence on European Savings and Investment Union (SIU). We fully endorse the goals of the SIU to contribute to supporting the green and digital transitions and ensuring economic and social sustainability for the EU in the long term. We agree that EU citizens retirement needs should be better served and that EU businesses should have more financing options in the EU. As highlighted in several recent reports, strengthening the EU's competitiveness is an urgent priority, and an efficient market is essential for enabling companies to scale up and compete on a global stage. In this context, a robust and competitive financial sector is crucial to channel EU savings toward policy objectives and provide companies with the funding they need to grow, tackle transitional challenges, and enhance their global competitiveness. In particular, private equity and venture capital (PE/VC) players have an essential role to play in bridging European savings and funneling them towards EU companies in strategic sectors. We recognize the efforts already made to advance the Capital Markets Union. While the European PE/VC market is partially unified in terms of participants, products, investments, and investors, significant work remains to unlock its full potential. Action is needed across all levels of the value chain to remove barriers and maximize opportunities. Many of the practical measures outlined in our manifesto "for a stronger, greener, more innovative, equitable, and inclusive Europe" align with the high-level recommendations in the Letta and Draghi Reports aimed at boosting EU competitiveness. Specifically, we support proposals to encourage participation in capital markets, mobilize retail savings, promote long-term investments, facilitate institutional investment, address regulatory and supervisory harmonization and enhance SME access to capital. In this context, France Invest would like to suggest the following concrete ideas to bring the SIU into effect. - Encourage European institutional investors, such as banks, insurers and pension funds, to invest more in PE/VC funds supporting European companies; - Encourage retail investors to diversify and allocate an increased portion of their investments in PE/VC funds: + Simplify the RIS proposed measures; + Implement a single European long-term savings product, in the form of a European label for national products that meet specific criteria, such as long-term focus, risk taking, lower liquidity, and predominantly European investments; + Streamline the European categorization of investors; - Adapt the rules to encourage European PE/VC funds to invest cross border: Address regulatory and administrative barriers to cross-border finance and investment. A more harmonized and legible framework would encourage cross-border investments into EU companies. For instance, the harmonization of insolvency regimes across the EU or the introduction of a 28th EU regime for innovative companies could be instrumental; - Consider the competitiveness of EU players in the making of any new European regulation and perform robust impact assessments before introducing new regulations; - Facilitate investment by VC/PE funds in innovative firms through a thorough revision of the EuVECA Regulation which would fundamentally simplify and reshape it and significantly enhance its appeal to both managers and investors. For instance, eligible assets should be expanded and funds of funds permitted. A platform-based solution should be set up in order to support fund managers in scaling up their fundraising efforts and diversifying investments geographically. which would fundamentally simplify and reshape it and significantly enhance its appeal to both managers and investors. We remain at the disposal of the Commission for further input and look forward to the publication of its Communication on SIU.
Read full responseMeeting with Alexandr Hobza (Cabinet of Executive Vice-President Stéphane Séjourné), Vincent Hurkens (Cabinet of Executive Vice-President Stéphane Séjourné)
6 Mar 2025 · Investment in innovative and technologically advanced companies
Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)
17 Feb 2025 · Union des marchés de capitaux
Meeting with Valérie Hayer (Member of the European Parliament) and Fédération bancaire française and
5 Feb 2025 · Simplification
Meeting with Gilles Boyer (Member of the European Parliament) and Fédération bancaire française and
5 Feb 2025 · Omnibus simplification
France Invest Urges Simpler Rules to Boost EU Competitiveness
27 Jan 2025
Message — France Invest calls for removing financial barriers and applying the one in, one out principle. They urge the Commission to avoid duplicating rules and prevent gold-plating by member states. The organization requests that European supervisors' mandates explicitly prioritize financial sector competitiveness and economic growth.123
Why — Streamlined regulations would lower administrative costs and facilitate cross-border private equity investments.45
Impact — National regulators might lose autonomy as power shifts toward centralized European supervisory authorities.6
Meeting with Stéphanie Yon-Courtin (Member of the European Parliament)
14 Nov 2024 · Savings and Investments Union
Meeting with Gilles Boyer (Member of the European Parliament)
2 Oct 2024 · CMU, sustainable finance
Response to Retail Investment Package
31 Jul 2023
France Invest fully supports the European Commissions objective to develop a coherent regulatory framework to empower consumers, enhance their participation in EU capital markets and help improved market outcomes. France Invest stands for the three most central aspects of the Commissions proposed Directive: ensuring good value for money for clients; addressing potential bias in the advice process; treating clients based on their characteristics. We also wholeheartedly support the Commissions proposal to improve financial literacy. Nonetheless, we believe the current proposal should be improved. In particular, managers marketing to professional-only clients should be more explicitly exempt from the rules set in the Retail Investment Strategy. Regarding cost disclosure, our industry is already well regulated. In our view, the introduction of a cap on the turnover of AIFMs or on the fees and expenses charged by funds is not justified. Most importantly, costs should be assessed in relation to benefits (volatility, investment strategy and expected net returns). It should also be noted that fees are not always possible to calculate prior to the fund marketing and not easily comparable from fund to fund. Last, the methodology proposed for developing benchmarks should be clarified. In the case of VC/PE funds, the development of benchmarks should be reconsidered at the occasion of the review of the Directive, as data is currently not sufficient to build relevant standards. Concerning inducements, cultural differences among the Member States should be taken into account. It should be kept in mind that the alignment of the inducement regime set out in the IDD on that of the MiFID will have a significant impact, considering that advice is not as widespread in the case of the distribution of insurance products. In any case, it is vital that investment firms can find a source of income, either commissions or other remunerations. In particular, it should be allowed for two entities to agree on sharing the remuneration relating to a single transaction which remunerates the provision of the service of advice provided by one entity and the service of RTO provided by the other entity. The review should take place in five years. Last, the enhanced test on quality of advice should better take into account the specificities of VC/PE. We warmly welcome the Commissions proposal to review the classification of clients under the MiFID and suggest further improvements. The first criterion of the fitness test should take into account the type of fund. The second criterion of the fitness test should include the value of clients financial instruments held directly and indirectly and be assessed at the time of the transaction. Last, we propose introducing an additional criterion on the size of commitment which could helfully replace thei first two. France Invest also supports the Commissions aim to improve the PRIIPs KID. However, the proposed new section Product at a glance is not well balanced and will increase the length of the document. Also, the proposed new section How environmentally sustainable is this product? should articulate smoothly with other requirements and practices, in particular in relation to sustainability preferences and greenhouse gas emissions intensity, and allow two additional items. The KID should be made available only to relevant investors and kept only during the marketing period of the fund. Closed ended funds which are no longer open for subscriptions should not be required to update their PRIIPs KID and PRIIPs which are marketed at the time of entry into application of the revised Regulation should be exempt from the obligation to have a new KID. Last, the KID should better take into account the specificities of VC/PE funds, for instance in relation to the use of carried interest, performance scenarios, the closed-ended nature of the funds and their holding period.
Read full responseMeeting with Gilles Boyer (Member of the European Parliament, Shadow rapporteur)
26 Sept 2022 · Sustainable Finance, ELTIF, AIFM
France Invest warns debt-equity rules will penalize small businesses
29 Jul 2022
Topic — The consultation addresses a directive reducing tax advantages for corporate debt financing.
Message — France Invest calls for an SME safe harbor and higher allowance rates. They argue the proposal creates a double penalty on interest deductions.123
Why — Maintaining current tax rules would prevent increased borrowing costs for venture capital portfolios.4
Impact — Small firms face increased borrowing costs and potential financial distress during economic downturns.5
France Invest warns against personal liability for fund directors
20 May 2022
Topic — New EU proposal requiring companies to identify and address environmental and human rights risks.
Message — The association requests exempting directors from personal liability and limiting due diligence to direct upstream relationships. They also seek clearer thresholds for investment funds and oppose linking executive pay to climate targets.12
Why — These changes would protect managers from legal risks and reduce administrative costs for portfolio companies.34
Impact — Victims of environmental damage would have fewer avenues to seek accountability for indirect supply chain abuses.5
France Invest Warns Against Burdensome EU Shell Company Rules
6 Apr 2022
Message — The organization argues current measures are sufficient to combat tax evasion and requests clarity on key concepts like outsourcing. They propose lowering the five-employee threshold and allowing for shared office premises.123
Why — This would reduce significant compliance costs and avoid burdensome administrative follow-ups for investment firms.45
Response to Long Term Investment Funds – Review of EU rules
17 Mar 2022
At the time, France Invest supported the creation of European long-term investment funds (ELTIFs): our members saw it as an opportunity to encourage investors to commit their capital for the long term. Indeed, private equity is a long-term investment: the average length of an investment into companies is around 6 years. However, we believe that ELTIF has not fulfilled its ambitions and therefore welcome the Commission’s proposal.
France Invest supports the enhancements to the ELTIF regime proposed by the Commission:
France Invest strongly supports the general objective to foster investments in companies and long-term investment projects. We agree that effective tools are needed to channel savings towards long term investments and are convinced that the enhancement of the ELTIF vehicle will contribute to smart, sustainable and inclusive growth.
In particular, we welcome the Commission’s proposals which remove key limitations on the supply side and, more specifically, make the structuration of ELTIFs more flexible, for instance by enlarging the assets eligible, and allow them to invest into funds other than ELTIFs, EuVECAs and EuSEFs - even though we suggest enlarging this possibility to build funds of funds - as well as the possibility to structure master-feeder funds. We also welcome eased operating conditions, in particular the removal of the ban on co-investment, the facilitated use of borrowed funds and alleviated requirements for ELTIFs marketed exclusively to professional investors.
We also welcome amendment proposals relating to the demand side which aim at broadening investor access to ELTIFs, in particular the adaptation of the transparency requirements to the type of investors concerned and the removal of requirements regarding the marketing of ELTIFs to certain retail investors. We also support the deletion of the obligation to have “facilities” in each Member State and of the obligation to advise investors that only a small proportion of their overall investment portfolio should be invested in an ELTIF. Besides, we are not against the removal of the minimum entry ticket into ELTIFs.
France Invest would like to propose some enhancements to the Commission’s proposal:
We propose clarifying the definition of feeder and master funds to cover both legal forms of funds and removing the requirement to keep a central public register of ELTIF documentation in order to preserve confidentiality. We also suggest pushing back the application date of the revised Regulation and introducing a grandfathering provision for existing ELTIFs.
France Invest suggests additional improvements to the ELTIF regime
In addition to these much-welcomed amendments, we urge the co-legislators to further enlarge the assets eligible to ELTIFs’ portfolios: most importantly, we call for ELTIFs to be allowed to invest in financial undertakings as well as non-EU funds and for the limit on investing in other ELTIFs, EuVECAs and EuSEFs to be increased to 100% also for retail investors.
We are also in favour of a further reduction of the demand side barriers to investment in ELTIF. More specifically, we suggest enlarging the category of professional investors as per the EuVECA Regulation, in order to include high net worth and/or sophisticated individuals and family offices.
In our view, a more harmonised implementation of the Regulation by Member States is needed: the effectiveness of the ELTIF framework should not be impaired by national legislation
Last, we would like to take this opportunity to reiterate our call for enhancing the general attractiveness of the ELTIF framework for investors, by making the prudential requirements applicable to institutional investors (e.g. pension funds and insurance companies) more appropriate to ELTIFs’ long-term equity investment horizon and introducing an attractive tax regime and enhancing retail investor education with regards long term investments.
Read full responseResponse to Alternative Investment Fund Managers – review of EU rules
17 Mar 2022
France Invest welcomes the Commission’s proposal for a review of the Alternative Investment Fund Directive (AIFMD). From a general standpoint, we fully support the approach adopted by the Commission to perform a targeted review of the Directive. Indeed, we acknowledge that the AIFMD contributed to improving financial stability, increasing investor confidence and enhancing the competitiveness of the EU industry. Nevertheless, we would like to recall that its implementation demanded a considerable adaptation effort from many market players, which have now integrated its impact.
More specifically, we would see merit in tweaking some of the changes proposed by the Commission. For instance, we propose:
- Limiting the list of information to provide by AIFMs in their authorisation applications: Indeed, in order to ensure a high level of harmonisation across Member States, there should be no discretion for national competent authorities to request additional pieces of information from AIFMs;
- Clarifying some rules on delegations:
o We consider the current AIFMD delegation rules to be appropriate and sufficient to ensure investor protection. However, considering the new wording of the obligation for AIMFs to notify the competent authorities of their home Member State of delegation arrangements, it should be clarified that AIFMs are allowed to either outsource or delegate the services included in Annex I depending on their specific situation;
o We propose setting out a bundle of indicators to demonstrate that the relevant functions are more delegated than retained by the AIFM. These indicators could include assets under management, number of managers, number of funds, breakdown of revenues between delegated and retained functions. In addition, we suggest taking into account whether delegations are performed within or outside the group of the AIFM: we believe that only delegations to entities which are outside the group of the AIFM and located in third countries should be reported upon;
- Specifying conditions for granting authorisations: In our view, the requirements proposed by the Commission should be alleviated so that the relevant functions can be performed by at least two natural persons working in the EU, one of which being a full-time person;
- Detailing some requirements on loan origination: We believe that it should be specified that loan origination does not include shareholder loans. In addition, the specificities of debt funds should be better take into account and the scope of the retention requirement should be strictly defined;
- Further tailoring new requirements on liquidity management: We propose adding an option to adapt the 60% threshold proposed by the Commission when a mechanism to meet redemptions requests is in place and justifies such an adjustment;
- Rewriting changes to reporting requirements: In our opinion, investor disclosures do not need to be more detailed or more frequent. We propose adapting the frequency of investor disclosures to types of funds, in particular to closed ended AIFs. Also, the protection and confidentiality of information should be ensured.
Beyond these adjustments to the Commission’s proposals, we would like to suggest additional enhancements to the AIFM framework. In particular, we suggest:
- Inserting in the AIFMD a definition of professional investors, taken from existing texts – the EuVECA exemption and the ELTIF exemption. This would allow to better reflect the specificities of long-term investors;
- Introducing a grandfathering clause for loan originating funds and confirming that the new rules only apply from the date of implementation and not to existing investment structures;
- Introducing a depositary passport: Indeed, the lack of depositary passport leaves the market for depositary services fragmented and prevents AIFMs to tap the benefits of the EU market.
Please find attached our position paper which sets our views in further detail.
Read full responseFrance Invest warns against double sanctions in EU AML reform
22 Nov 2021
Topic — A legislative package proposed by the European Commission to strengthen anti-money laundering rules.
Message — France Invest requests that new AML requirements for investment funds articulate smoothly with existing regulations. They call for beneficial ownership registers for common funds across all Member States. The association warns against a double supervisory and sanctioning regime.123
Why — Centralized registers and harmonized supervision would ensure a level playing field for firms.45
Impact — Opaque non-institutional investors lose anonymity through enhanced registers and stricter identification rules.6
Response to Revision of Non-Financial Reporting Directive
13 Jul 2021
France Invest’s members have been committed to Environmental, Social and Governance (ESG) matters for long. In this context, we welcome the Commission’s proposal for a Directive on corporate sustainability reporting (CSRD).
France Invest’s members have to produce reports on their own ESG activities, and to do so they need input data from the companies they invest in, and actively support these companies in addressing sustainable issues over the long term and can contribute to their transformation over time. It is therefore important to take into account the specificities of this sector. Indeed, the main characteristics of the VC&PE business model include: (i) the existence of extensive knowledge reporting and the organic exchange of information that grows from the very relationship between VC&PE investors and company owners; and (ii) the core, primary targets of VC&PE investments are SMEs, start-ups and other high-growth companies.
Moreover, we would like to point out that the context of (post)crisis in which companies currently operate should be taken into consideration. The timing of any new rule should allow market participants to adjust to any additional requirements, especially in the case of smaller players which have fewer resources. We strongly support the gradual approach proposed by the Commission.
Furthermore, the size of the companies should be carefully taken into account when defining the scope of the Directive. We call for the full application of the proportionality principle for SMEs. In this respect, we strongly support the absence of new mandatory requirements for SMEs. In addition, we recommend considering a possible “trickle-down effect” on SMEs, which, even though not subject to the requirements of the Directive, may have to produce a sustainable reporting to meet the requests of their investors.
Regarding the content of the information to be disclosed, we believe that it should be carefully defined. We strongly support the exemption introduced by the Commission regarding the disclosure of information which would be seriously prejudicial to the commercial position of a company. Indeed, it is important to strike a balance between legitimate business interest in maintaining confidentiality of business plan and wider public policy requirements (if any) to disclose forward-looking information.
In our opinion, obligations applicable to SMEs should be realistic: new requirements for companies to provide information about their strategy, targets, the role of the board and management, the principal adverse impacts connected to the company and its value chain, intangibles, and how they have identified the information they report, should be determined with regards to the size of the relevant company.
Most importantly, we would like to highlight the need to ensure a smooth articulation of the CSRD with other pieces of legislation, both at EU level and globally. At EU level, consistency should be ensured with other sets of rules (existing and in progress), in particular the SFDR (e.g. disclosures concerning the principal adverse impacts of investment decisions on “sustainability factors”), the future social Taxonomy, the upcoming legislation on transparency on remuneration and on gender parity, and the new initiative on sustainable corporate governance. At international level, we would warn against creating an EU standard when others, such as SASB and TCFD, are useful and have already gained significant traction globally. In other words, global coherence is important.
Last, we understand that a Directive aims at providing some flexibility in its implementation; however, we believe that a level playing field among the EU Member States should be maintained, in order to avoid any regulatory arbitrage. For instance, the list of items to be disclosed should be exhaustive, wherever possible, in order to avoid any gold plating by Member States.
Read full responseMeeting with Claude Bocqueraz (Cabinet of Commissioner Mairead Mcguinness)
1 Jul 2021 · CMU/ELTIF review
Response to Digital Operational Resilience of Financial Services (DORFS) Act
15 Feb 2021
Established nearly 40 years ago, France Invest represents most venture capital and private equity teams based in France. The Association also welcomes French infrastructure and private debt teams, as well as service providers and financial institutions based in France which support and advise investors and entrepreneurs in the structuring and management of their partnerships. Our membership currently counts 340 management firms and 170 associate members.
France Invest’s members represent one of the main growth drivers for the French and European economy and support a significant portion of employment in France and Europe. In 2019, our members raised 41 bn EUR to finance companies, both through equity and debt, and infrastructure projects, over the coming 5 years. French private equity is no1 in the EU27 in terms of funds raised, capital invested, and number of companies funded. About half of the funds raised by French private equity players come from abroad, and European companies, in particular SMEs and start-ups, are the main recipients of their investments. In 2018, companies backed by French private equity created 75,000 jobs.
From a general standpoint, France Invest supports the objectives of the Commission’s strategy for digital finance: the creation of a single market for financial services, the introduction of a regulatory framework encouraging digital innovation, the development of an EU market for financial data and the treatment of the challenges of the digital transformation.
In particular, we welcome the Commission’s proposal for a regulation on the digital operational resilience of the financial sector, which aims at addressing cyber risks in the financial sector. We fully share the Commission’s objective to enhance investor protection and ensure their trust in the financial sector.
We understand that, with this Regulation, the Commission aims at streamlining the regulatory framework applicable to financial entities in terms of digital resilience and we fully support this objective. It should be noted that our members already comply with a number of rules, may they be legislative or not, aiming at ensuring their digital resilience or the protection of investors and their data (e.g. GDPR), at international, European and national level. Besides, we understand that the Commission has launched or intends to undertake several legislative initiatives, including the NIS review. We would like to insist on the need for a consistent articulation of all these different texts.
The proposed Regulation includes heavy constraints for our members. Therefore, we ask for the proportionality principle to apply fully, for instance through the introduction of thresholds or lighter requirements for smaller players. We would also suggest allowing enough time for market players to bring their processes in compliance with any new rules, through an appropriate implementation date and/or a phased implementation.
France Invest would like to underline the need for its members to keep access to a wide enough range of ICT providers. For instance, they use software solutions to streamline and centralize their investment cycle, optimize processes, and enhance data and reporting. The new DORA requirements should not restrict access to quality providers or impose overly burdensome and costly obligations on them.
Finally, it should be noted that France Invest’s members are impacted by the DORA requirements not only at their own level, as management companies, but also at the level of the companies/digital service providers they support. Indeed, many venture capital and private equity funds invest in fintech and regtech startups and companies. For instance, in 2018, French venture capital invested in about 400 IT companies (over a total of 900 companies), representing over EUR 800 million (over a total of EUR 1,600 million) .
For further information, please feel free to contact Carine Delfrayssi at c.delfrayssi@franceinvest.eu.
Read full responseResponse to EU single access point for financial and non-financial information publicly disclosed by companies
15 Jan 2021
Established nearly 40 years ago, France Invest brings together venture capital, private equity, infrastructure and private debt teams based in France, as well as the associated professions which support them. Its membership currently counts 340 management firms and 170 associate members. France Invest’s members represent one of the main growth drivers for the French and European economy and support a significant portion of employment in France and Europe. In 2019, its members raised 41 bn EUR to finance companies, both through equity and debt, and infrastructure projects, over the coming 5 years.
Data, both financial and non-financial, now plays a crucial role in the value chain and has become a strategic issue. Our members are impacted by data related issues from two different angles, as they are both producers and users of data.
In this context, we welcome the Commission’s proposal to introduce a single EU access point for company information. Indeed, the emergence of data as “the new black gold” raises questions, not only in terms of availability and cost, but also with regards the sovereignty and competitiveness of the EU.
France Invest’s members, as financial companies, produce data. They are subject to supervisory reporting requirements and disclosure obligations towards investors. In this context, we believe that the ESAP would bring about a key missing piece of the CMU and contribute to further integrating European capital markets. In our opinion, it should articulate with existing regulations such as MiFID, NFRD, PRIIPs, Disclosure and Taxonomy Regulations.
Our members, as investors, need easy access to reliable, comparable and affordable data. We fully agree that investors should have access to information on companies and financial products to make sound investment decisions. In particular, venture capital and private equity firms need data on private companies - even though it is understandable that the latter may have less resources to produce information than public companies. Furthermore, our members are required to integrate ESG issues into their policies investment. Currently, most data providers are not subject to any regulatory requirements regarding prices. The ESAP will improve our members’ access to data company, allow them to reduce search costs and allocate capital more efficiently across the EU. Conversely, it will ensure more visibility for companies in need of financing.
The format of the information disclosed by companies to the public should be harmonised and standardised, making such information easier to find, compare and analyse. This should increase competition and reduce the cost of data. Currently, the race for the size of data providers leads to a strengthening of dominant positions and to the constitution of oligopolies that impact users. Historic actors are equipped with large means to collect, distribute and control the use of data. Margins of negotiation of the institutions vis-à-vis these actors are then limited, mainly due to this unfavourable balance of power. The ESAP will make data available to all users in an electronic format and at a reasonable cost.
Beyond the issue of the availability at of reliable, comparable and affordable data, we believe that the competitiveness and sovereignty of the EU are at stake. Indeed, it is of the utmost importance to ensure that we control the chain of data provision as well as the analyses of rating agencies at EU level. Currently, the actors providing data (data providers, rating agencies, benchmark administrators, etc.) are, for the most part, non-European entities. For instance, there is currently no purely European agency for non-financial data. Reliance on non-EU data service providers should be reduced. In particular, the subject of data sovereignty for all EU companies is a major issue for the application of the Taxonomy Regulation.
Read full responseResponse to State aid rules on risk finance for SMEs
14 Jan 2021
Established nearly 40 years ago, France Invest brings together venture capital (VC), private equity (PE), infrastructure and private debt teams based in France, as well as the associated professions which support them. Its membership currently counts 340 management firms and 170 associate members. France Invest’s members are active contributors to the funding and development of SMEs. In 2018, the French venture capital industry supported 900 start-ups and SMEs, mainly in the IT and medical/biotechnological sectors, for an amount of investment reaching EUR 1 600 million .
In order to make the existing rules allowing EU countries to help SMEs access finance more efficient, France Invest would like to propose some amendments to the Risk Finance Guidelines (RFG) and to existing concepts set in either the General Block Exemption Regulation (GBER) or the RFG.
1/ The exemption from the undertakings in difficulty definition for “SMEs within 7 years from their first commercial sale” in the RFG should be amended:
a) As recognised by the European Commission (Recommendation 2003/361/EC of 6 May 2003), the current definition of SMEs prevents businesses which receive majority ownership from a venture capital company to be eligible to this status. Therefore, as explained previously:
i. the reference to venture capital companies should include both legal forms of VC and PE AIFs;
ii. the thresholds should be removed and a full exemption to the criteria of the definition should apply for both VC and PE investments.
b) The RFG explicitly recognises that a 7-year period may be too short for innovative companies. Also, a study by BPI France demonstrates that the initiative for encouraging investments in venture companies which are between 7 and 10 years is useful and necessary (venture companies which are between 7 to 10 years represent 52% of enterprises which realised their first commercial sale). This confirms the failure of venture capital market for enterprises aged from 7 to 10 years (SA.55869). We therefore suggest extending this period of 7 to 10 years.
c) We propose introducing a threshold of EUR 250,000 of turnover to identify a “first commercial sale”, in line with authorisations granted by the Commission, which considered the 10-year period to be counted from the year following the one when the company’s turnover exceeded EUR 250,000 (SA.41265/SA.40725).
2/ Existing concepts set in the GBER / the RFG should be reviewed:
a) The condition for follow-on investments to be “foreseen in the original business plan” is difficult to apply in a Venture Capital context, where business plans are constantly updated as the business and the markets in which it operates evolve. For instance, the recent Covid-19 crisis forced SMEs to review their original business plans, preventing them from receiving follow-on investments. Follow-on investments should be allowed for businesses which have to update their business plans.
b) The definition of “first loss pieces” set out in RFG should be applied in GBER. Indeed, the terminology used in the GBER and FG for the most junior risk tranche that carries the highest risk of loss creates some uncertainty.
c) Conditions for the use of “replacement capital” in the GBER (Article 21.7) should be reviewed, as they are at odds with broader policy objectives of overcoming market failures in SME finance and encouraging SME job creation. In particular, this rule may penalise minority shareholders (i.e. business angels) who will not be able to transfer their shares to another shareholder and will have to remain in the company's capital. In addition, this measure may lead to a dilution of the founding shareholders in the capital of the company. In this context, we suggest removing this measure or, failing that, limiting the percentage of new capital combination to 10% of the capital of the company.
Read full responseResponse to Alternative Investment Fund Managers – review of EU rules
7 Jan 2021
France Invest acknowledges that the AIFMD contributed to improving financial stability, increasing investor confidence and enhancing the competitiveness of the EU industry. It however demanded a considerable adaptation effort from many market players, which have now integrated its impact. Therefore, we are not in favour of a complete overhaul of the regulatory framework, even though we would support some slight adjustments.
Regarding supervisory reporting, we believe that, from a general standpoint, AIFMs now operate with a sufficient level of transparency. For this reason, we are not in favour of more detailed reporting requirements which would imply unnecessary costs with no demonstrated benefit. However, we understand that the fund classification used could be made more granular.
As concerns leverage reporting, we would like to highlight that, overall, the leverage calculation methods available under AIFMD are appropriate. However, the implementation of the calculation metrics by the Member States could be further harmonised.
Our members have now integrated the AIFMD transparency requirements on investments in private companies, even if some of them might not appear fully appropriate. Regarding asset stripping rules, we call for more consistency and for taking the time to reflect upon the relevance of the existing rules. Indeed, the prime aim of the French PE/VC industry is to support the development of private companies. Besides, we would like to take this opportunity to underline the pivotal role of FDI screening in protecting EU companies from potential malevolent takeovers by non-EU entities.
We believe that the lack of a depositary passport is at odds with the spirit of the single market and are in favour of its introduction, which would enhance financial stability and ease supervision, increase choice and reduce costs for the benefit of investors.
Our members are not against increased retail investor access to AIFs, provided this does not imply overly burdensome additional obligations and costs and the right balance can be struck. More precisely, we support the enhancement of the ELTIF regime and the development of ELTIFs, which can be marketed to retail investors with a passport throughout the EU. In addition, we call for the definition of the “professional client” category in the AIFM Directive to be adjusted on the model of the definition set out in the EuVECA Regulation.
Regarding the delegation of AIFM functions to third parties, we call for a status quo, as the existing rules appear to be appropriate and efficient.
Last, a topic that is not included in the Commission’s impact assessment is remunerations. This issue is highly sensitive, and we believe it is crucial to maintain the proportionality principle, which is of utmost importance in implementing the rules.
For further information, please feel free to contact Carine Delfrayssi, European and Regulatory Affairs at France Invest, at c.delfrayssi@franceinvest.eu or +33(0)1 47 20 99 79
About France Invest:
France Invest brings together venture capital (VC), private equity (PE), infrastructure and private debt teams based in France, as well as the associated professions which support them. Its membership currently counts 340 management firms and 170 associate members.
PE supports unlisted companies for a fixed period of time and provides them with the equity capital, through the acquisition of minority or majority stakes in their capital, needed to finance growth and transformation projects. It supports the creation of start-ups, participates in the growth and transformation of SMEs and mid-caps and contributes to the transfer of companies.
France Invest’s members represent one of the main growth drivers for the economy and support a significant portion of employment in France and Europe. In 2019, its members raised 41 bn EUR to finance companies, both through equity and debt, and infrastructure projects, over the coming 5 years.
Read full responseResponse to Enhancing the convergence of insolvency laws
8 Dec 2020
France Invest brings together venture capital, private equity, infrastructure and private debt teams based in France, as well as the associated professions which support them. Its membership currently counts 340 management firms and 170 associate members. France Invest’s members represent one of the main growth drivers for the French and European economy and support a significant portion of employment in France and Europe. In 2019, its members raised 41 bn EUR to finance companies, both through equity and debt, and infrastructure projects, over the coming 5 years.
Private equity supports unlisted companies for a fixed period of time and provides them with the equity capital, through the acquisition of minority or majority stakes in their capital, needed to finance growth and transformation projects. It is a medium to long-term investment, characterised by active ownership. Private equity ownership builds better businesses by adding and strengthening management expertise, providing strategic guidance on delivery of operational improvements and helping companies to access new markets. It supports the creation of start-ups (venture capital), participates in the growth and transformation of many regional SMEs and mid-caps (growth capital), contributes to the transfer of companies (replacement capital) and helps the turnaround of businesses.
In particular, venture capital backs entrepreneurs with innovative ideas for a product or service who need investment capital and strategic advice in growing their companies. It supports innovation (tech, biotech, digital) and, considering the inherent risk in any start up business, is bound to see some failures. In France, this subsegment of private equity invests in about 800-900 companies each year.
Another particular sub-set of the private equity industry is involved in turnaround scenarios. This is where a private equity fund invests in a company which is underperforming with a view to returning that business to a sustainable growth path. Through the introduction of fresh capital and re-structuring the business and by taking an active role on the board, the managers of private equity funds are able to oversee the company’s transformation into one that is once again profitable and growing. In France, this subsegment of private equity is still relatively small, with about 20 transactions per year.
As the companies they invest in are directly impacted by insolvency laws, France Invest members welcome the Commission’s consultation on enhancing the convergence in this field.
Indeed, we share the view that the divergence of national insolvency frameworks hinders capital flows in the EU, as it makes it harder for our members to assess credit risk. The more convergence there is in relation to insolvency laws, the easier and more cost effective it will be to assess the risks when making cross border investments. We fully agree that increased predictability in this respect will contribute to establishing a well-functioning Capital Markets Union.
First of all, easy access should be ensured to information on insolvency laws and how they are implemented in practice in each Member State.
A recommendation would allow the EU institutions to share their opinion on need for increased convergence of insolvency laws and to suggest a line of action without imposing any legal obligation on the Member States. However, as recommendations are not binding on the Member States, we are concerned that such instrument would not achieve the required level of harmonisation. On the other hand, a directive would require EU Member States to achieve a certain result and leave them free to choose how to do so. In our opinion, it seems that such instrument would be better suited to achieve the ambition of the Commission. In any case, any work on a new directive should be based on a preliminary comparative study of the transposition of Directive (EU) 2019/1023 of 20 June 2019 by the Member States.
Read full responseResponse to Long Term Investment Funds – Review of EU rules
13 Oct 2020
Established nearly 40 years ago, France Invest brings together venture capital, private equity, infrastructure and private debt teams based in France, as well as the associated professions which support them. Its membership currently counts 340 management firms and 170 associate members.
Private equity supports unlisted companies for a fixed period of time and provides them with the equity capital, through the acquisition of minority or majority stakes in their capital, needed to finance growth and transformation projects. It supports the creation of start-ups (venture capital), participates in the growth and transformation of many regional SMEs and mid-caps (growth capital) and contributes to the transfer of companies (replacement capital).
France Invest’s members represent one of the main growth drivers for the French and European economy and support a significant portion of employment in France and Europe. In 2019, its members raised 41 bn EUR to finance companies, both through equity and debt, and infrastructure projects, over the coming 5 years. French private equity is no1 in the EU27 in terms of funds raised, capital invested, and number of companies funded. About half of the funds raised by French private equity players come from abroad, and European companies, in particular start-ups and SMEs, are the main recipients of their investments. In 2018, companies backed by French private equity created 75,000 jobs.
At the time, France Invest supported the creation of ELTIF, as our members saw it as an opportunity to encourage investors to commit their capital for the long term. Indeed, private equity is a long-term investment: the average length of an investment into companies (the “holding period”) is around 6 years.
However, we believe that ELTIF has not fulfilled its ambitions and therefore welcome the Commission’s proposal for a Regulation amending Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds.
France Invest strongly supports the Commission’s general objective to foster investments in companies and long-term investment projects. We agree that effective tools are needed to channel savings towards long term investments and concur with the Commission’s assessment that the enhancement of the ELTIF vehicle will contribute to smart, sustainable and inclusive growth. Moreover, we share the Commission’s assessment of the reasons as to why the ELTIF market has not developed to a larger scale.
We agree with the Commission that limitations on the supply side should be removed and, more specifically, that « financial undertakings » should be included in the assets eligible to ELTIF. Indeed, the fact that they cannot fulfil structural obligations related to the financing of projects, such as infrastructure projects, is a strong hindrance to the development of ELTIF.
In addition, we believe that the development of ELTIF was hampered by the lack of clarity regarding key concepts such as eligible investments (“real assets”) and the of the notion of “benefitting the European economy”.
France Invest is open to the Commission’s proposal to reduce the demand side barriers to investment in ELTIF impacting retail and institutional investors. We are not against the participation from a wider range of investors and, in particular, the lowering of the minimum entry ticket for retail investors, provided this does not imply overly burdensome obligations.
In addition, we call for prudential requirements applicable to institutional investors (e.g. pension funds and insurance companies) to be made appropriate to ELTIF’s long-term equity investment horizon. In other words, we are of the opinion that no institutional investor should be disincentivised to invest in a ELTIF vehicle due to its long-term nature.
For further information, please contact Carine Delfrayssi, European and Regulatory Affairs Director, at c.delfrayssi@franceinvest.eu.
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