European Parliament has voted strongly in favour of a new bill which allows fund managers to market venture capital and social investment funds throughout the whole of the EU without obtaining approval in each member state.

Karl H Richter, adviser on social impact investments for the Euclid Network and co-founder of Engaged Investment, said the move would help reduce fundraising costs for social investment:

"It is an important milestone in the development of a more deeply integrated capital market for social investment across the EU,” he said. “The European Social Entrepreneurship Funds (EuSEF) label for funds should help with cross-border fundraising, the streamlining of compliance and reduction of fundraising costs particularly for investment in new member states or where the track record of social investment is building.

“We now need to continue our work with both practitioners on the ground and the European Commission in terms of implementing the EuSEF regulations to ensure that take-up is high.”

The new rules on European venture capital funds and European social investment funds create a special EU passport for all fund managers that invest in start-up SMEs and social businesses.

Under the new rules, fund managers will need to register with the appropriate authority in their home member state, but then will be able to market their venture capital and social investment funds throughout the whole of the EU without obtaining approval in each member state.

They can target either institutional investors or retail investors who are able to invest more than 100,000 euro. The rules make sure that the funds focus at least 70 per cent of the capital they raise on equity investment in unlisted SMEs or on equity or debt support for social enterprises.

Filippo Addarii, Euclid Network executive director and member of the expert group on social business, hosted by DG Market, said:

“We are excited by this new development. The Commission is taking the lead in fostering a European market for social investments. We have been part of the process from the beginning and intend to support Brussels in its efforts to connect social investors from across Europe. Our ambition is to encourage the EU to extend this policy beyond the single market, applying its social investment framework to enlargement policy, aid policy and global financial markets.

"This is also an opportunity for the UK to reinforce its relationship with the EU and together to make a difference at the next G8.”