European tech firms are struggling to win capital because states are encouraging low risk investment in bonds over innovation, a leading Irish investor has said.
Elaine Coughlan, founder and managing partner at Atlantic Bridge, which has over €1 billion of assets under management, called for moves to encourage more pension funds to back business.
“There’s trillions of euros in pension funds and life insurance so why isn’t it being invested in companies? I’ll tell you why, it’s because during the financial crisis, governments depended on them to buy bonds,” Coughlan said during a panel discussion in Dublin to mark Europe Day.
Her comments come as recent figures from the European Central Bank, EU pension funds allocate just 0.02 per cent of total assets to venture capital, compared with almost 2 per cent for US pension funds.
“We have the capital needed to support tech companies but it is all going on government bonds. A decision has to be taken to allow some of that money to go on innovation instead,” Couglan said.
She also underscored the need for regulatory simplification to foster innovation and competitiveness.
Coughlan was speaking at a panel discussion at Dogpatch Labs at which Clara Chappaz, France’s minister for digital affairs, also appeared.
Chappaz said the continent faces considerable challenges in terms of innovation, but she believes there is more of a willingness to actively engage and consider the EU as one unified market than ever before.
“Europe is uniquely positioned to build a dynamic tech ecosystem but the only way we can do this is to work more with each other,” she said.
The minister suggested that member states “need to stop counting how many tech unicorns each nation has produced” and focus instead on collaborating to build a stronger ecosystem that can better compete with rivals.
Chappaz also stressed the need for action over discussion, saying too much time has been spent considering ways to respond to the continent falling behind the US and China in terms of innovation, without enough concrete steps being taken.
Her Irish counterpart, Niamh Smyth, minister of state with responsibility for AI and digital transformation, said standardisation across different markets “would help unlock more funds that would ensure innovation continues to flourish.”