Question to the EC: Court of Auditors report on venture capital

See Francisco Guerreiro’s question to the European Commission and the written answer on the Court of Auditors report on venture capital.

Subject: Court of Auditors report on venture capital

One of the main conclusions of the European Court of Auditors’ Special report on ‘Centrally managed EU interventions for venture capital: in need of more direction reads as follows: 

‘When designing future interventions, the Commission is required to carry out timely and meaningful interim and ex post evaluations, taking into consideration lessons learnt. The ex post evaluations that were conducted were generally done too early, often before the programmes had even ended. Moreover, these evaluations lacked analysis based on quantitative data and overlooked counterfactual scenarios. Thus, despite a 20-year history of venture capital support, the Commission has so far provided only limited evidence of the impact achieved (see paragraphs 37 to 46).’

The Commission’s response was evasive and somewhat incongruous. It argues that its hands are tied because the timing is imposed by Parliament and the Council and that the various, poorly substantiated, arguments given are insufficient grounds for changing the evaluations.

The ECA has ordered the Commission to change the timing given that it has failed to demonstrate any real impact, despite having provided support for 20 years.

Will the Commission propose changes to the timing of its interim or ex post evaluations, in line with the ECA’s conclusions?

Answer in writing

The European Court of Auditors issued recommendations to the Commission to change the timing of ex post evaluations of its future interventions. However, in this case, the Court’s recommendations cannot be implemented due to a number of reasons.

The Court’s Report conclusion quoted by the Honourable Member should be read together with the Commission’s replies to that paragraph and paragraphs 37-46. In particular, the Commission pointed out that evaluations and reporting did contain quantitative data (e.g. on mobilised investment, countries covered, numbers of beneficiaries and their sizes, employment, profitability of investments and much more), which offers some evidence of the impact achieved.

Furthermore, the Commission alone is unable to implement the Court’s recommendation(1) to change the timing of the evaluations as that is prescribed by the underlying legislation adopted by the European Parliament and the Council in a co-decision procedure. The timing is therefore not solely in the Commission’s discretion and any modifications to it would require changes to the legislative basis. 

In addition, there is a clear trade-off between the timing of the evaluations and the availability of comprehensive data. A fully-fledged impact assessment could only be carried out once the beneficiaries have acted upon and benefitted from the programme’s support, which is too late for the design of successor programmes. While an earlier evaluation may not capture all of the programme’s effects, it is nonetheless more meaningful to the process of programme design, which is what the Court mandates. Furthermore, the Commission, in addition to formal evaluations, looks at the lessons learnt and the results of the programmes, even decades after their launch, through regular analysis of reporting, market data, studies and the European Investment Fund papers. 

Looking ahead, the proposed InvestEU regulation envisages an interim and a final evaluation — based on Key Performance Indicators monitoring and reporting activities — scheduled in 2024 and by 2031, respectively.

(1)       Recommendation 1 (c): ‘To improve its evaluations, the Commission should conduct retrospective evaluations a certain time after the investment period for ESU 1998, ESU 2001 and GIF, to allow for a meaningful conclusion on the impact of the interventions.’

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