Description
This independent evaluation examines the EIF’s 4th Pillar initiative, launched in 2017 to attract private institutional investors into private equity and venture capital through the EIF’s equity investment framework. Initially conceived to stabilise the EIF’s funding base and broaden European institutional investor participation in private markets, the initiative subsequently evolved to channel private capital towards underserved, high risk segments of the European market, in line with EU objectives to mobilise household savings and support innovation finance.
The evaluation finds that the 4th Pillar demonstrated the EIF’s ability to engage risk averse institutional investors new to the asset class, raising €1 billion between 2017 and 2023 and leveraging the diversification benefits of a fund of funds structure. However, the initiative did not succeed in attracting or retaining private capital on a sustained basis and remained marginal in the EIF’s overall funding base, falling short of its initial and subsequent fundraising targets.
The evaluation concludes that, against a growing strategic need to mobilise institutional private investment into European venture capital, any future effort to build on the 4th Pillar experience would require a substantially revised approach.
The evaluation makes four recommendations:
- Reassert the distinct objectives of the 4th Pillar, then tailor fundraising strategies to each one.
- Ensure sustainable institutional commitment to private sector fundraising by securing senior leadership support, demonstrated through visible and active participation in investor relations.
- Before launching new compartment strategies, perform rigorous pre-market assessments to validate market needs and competitive positioning.
- Establish a robust investor relations strategy with dedicated fundraising capabilities and continuous relationship management.
