When Marjut Falkstedt took up her role as head of the European Investment Fund (EIF) two years ago, the conversations VCs — and politicians — were having, in public at least, were very different.
Defence spending wasn’t regularly headline news, or part of VC social media chitter chatter. Today, it very much is.
That means the EIF — the biggest backer of Europe’s VCs, investing €7bn in equity financing last year, with €143.7bn in assets under management — has shifted its priorities.
“[Security] is something the EIF, along with other partners, should be investing in with a stronger focus,” Falkstedt tells Sifted over a video call from Luxembourg, where the organisation is headquartered. In March, the European Investment Bank, a major source of the EIF’s funding, approved €8.9bn of new financing for investments in security, defence and critical raw materials.
“We have never been able to invest in weapons and ammunition — but everything else around it, we can.”
That includes space, artificial intelligence, quantum and unmanned vehicles such as drones. “It’s also about energy supply, enabling infrastructure that all our companies need in order to make Europe resilient,” Falkstedt says.
Rearming Europe
At the start of 2024, the EIF announced a new €175m “pilot” pot, dubbed the Defence Equity Facility, to invest in VC funds backing defence tech. “We’re looking at a very good pipeline,” says Falkstedt.
More than €43m in funding for six deeptech, security and defence VC funds has been approved. One of them is Omnes Capital’s second ‘Real Tech’ fund, which invests in early-stage European deeptechs.
Climate tech also remains a priority, Falkstedt stresses. “The focus that the EIF has had on climate financing will continue, and we will stand the course. That’s our key message to all those impact investors out there.”
Scaling up
Another key priority for the EIF is providing European startups with the scaleup capital they need to stay put on the continent.
“As the markets have matured, we need more growth and scaling up capital.”
Cue the European Tech Champions Initiative; a €3.75bn fund, announced before Falkstedt took the helm, to invest in late-stage European VC funds of over €1bn. It’s publicly backed eight funds, including Atomico and Headline, with 12 deals approved. “We will have used all the funding that we have available by the end of the year,” says Falkstedt. “It’s in our plan to raise a second fund, which should be even bigger than the first one.
“The needs are enormous; we have to help our innovation companies grow faster, and have the means to become European leaders, global leaders, and not necessarily move outside the European Union where potentially the markets are bigger […] that is one of the key objectives we have in the EIF.”
The EIF has been primarily funded by EU member states, the European Investment Bank and European Commission — but increasingly hopes to have private backers too.
“This is the difficult part,” says Falkstedt. “We have to find solutions to be able to attract them.”
Pension funds and insurance companies are the number one targets, says Falkstedt. “There are [private] investors who are already investing into our programmes — but we have to get it to a totally different scale.”
One roadblock, she says, is access to performance data. “Often they say they don’t have enough data to make an investment decision.”
To counter that, the EIF has soft-launched Track VC, a new platform it’s built in partnership with US asset manager BlackRock to enable investors, fund managers and policymakers to access historical fund performance data.
It’s also considering developing “sandboxing tools,” says Falkstedt, with the help of regulators and the European Commission, to encourage pension funds and insurance companies to dip their toes into investing in venture. A sandbox could, for example, relax the regulation around capital charges — the capital an institution must hold in reserve against ‘risky’ investments. “At a European level one could find solutions to take this burden away.”
Falkstedt is also keen to channel more money to mid-sized venture funds.
“Europe needs a big boost of funds sized between €250m up to €1bn. If I had one wish I would like to have the funding available so I can help those funds that are now €200m, €250m, become bigger — and to help the venture capital ecosystem really to stabilise itself.”
“We have not done a good job in letting our venture capital funds grow. We have these fund managers who create a €50m, and another €50m fund; a third time this should not happen. It should be €50m, €80m, €100m, €200m because otherwise we’ll never scale. And when teams expand, we will also get many more opportunities for female experts to enter a fund.”
That in turn should help Europe’s so-called ‘growth funding gap’, she believes.
“We have to target the funding gap between €50m-100m, because these are the companies that, if they stay in Europe, will create new companies, invest into other companies, acquire other companies, and it will make the whole ecosystem more robust. It’s really ecosystem building, and it’s a snowball effect.”
Shifting the dial on gender diversity
There have been changes inside the EIF under Falkstedt’s tenure too. When she joined, 15% of EIF management positions were held by women; now it’s 45%. The EIF also has a female deputy CEO, Merete Clausen, who joined at the start of the year.
“It was important to me to create a pipeline of future leaders in the EIF, which meant that people were taken out of their comfort zones and put into different positions, which was potentially a bit disruptive, and I think it was rather disruptive to clients as well […] But it was necessary to make a really great and robust EIF internally, so that we can deliver in the best manner possible to our clients.”
The increased focus on gender diversity also applies to the VC fund managers the EIF backs.
As of January 2025, 42% of the approximately 150 funds in the EIF’s portfolio have at least one woman in a partner or senior investment role.
“Going forward [we will] look at the ‘soft’ values of venture capital funds. Our staff want to look much deeper into the value culture of the fund, the ‘speak up’ culture in a fund, talk to their staff and try to figure out whether it’s a good employer. Look at equal pay issues. It’s not that it is necessarily an investment criteria, but it’s helping the fund managers in a mindset change.
“But I must say, it doesn’t look like we’re in a desperate situation at all. Most of the time, fund managers are really modern, and they understand that a diversity of opinions and views helps you make sustainable, long-term investment decisions.”
The EIF has stopped short of introducing a fund solely dedicated to backing gender diverse funds — as fellow public LP KfW has done in Germany.
“When we get applications, we look with a special eye at those ones that are women-only.
“But we’re doing it slightly differently,” says Falkstedt. “We’ve created different types of initiatives not linked to investment.”
Those include a peer-to-peer mentoring programme, and an academy for STEM students interested in moving into venture. “We want to make venture capital somehow palatable to people who potentially didn’t think about it initially.”
And what about the women who say, I don’t need more mentoring, I just need someone to give the money?
“They should talk to us.”
Read the orginal article: https://sifted.eu/articles/eif-head-marjut-falkstedt-interview/
