Mashid Mojabi: Europe must break free from its regulatory straitjacket

Mashid Mojabi: Europe must break free from its regulatory straitjacket

July 29, 2025

Private Equity Private Debt Europe Rules and Legislation Private Markets

This column was originally written in Dutch. This is an English translation.

By Mashid Mojabi, Policy Lead, Dutch Association of Private Equity and Venture Capital Funds (NVP)

The private equity and venture capital sector continues to grow steadily. In 2024, Dutch venture capital funds raised no less than €3.2 billion, of which €1 billion came from (foreign) pension funds. This is slightly less than in 2023 (€3.3 billion), but still well above the €1.5–2.5 billion raised in previous years. Dutch buyout funds raised €5.1 billion, mainly from institutional investors. This is also historically high.

A fund normally invests in 10 to 15 companies. Fewer means insufficient diversification, while more is not feasible from an organisational point of view: teams are too small to properly supervise all participations. Buy-and-build funds must also reserve capital for majority interests and follow-on acquisitions. In venture capital, without the firepower for follow-on acquisitions, you quickly lose ground.

The larger the assets under management, the closer you get to the AIFMD threshold of €500 million. Anyone who exceeds this threshold ends up in a licensing process that takes at least a year, involving substantial advisory costs and far-reaching changes to governance and compliance. These costs eat into regular fees and force fund managers to set up even larger funds. The result is clear: investment capital is shifting to larger companies, while smaller companies are experiencing a growing financing gap.

That financing gap has only widened since then. The €500 million threshold has never been raised since 2010, not even adjusted for inflation. Meanwhile, prices have risen by almost 43%. This effectively means that companies below that threshold now have 43% less scope than was originally intended. The small players are therefore footing the bill for a static and outdated regulatory framework.

The United Kingdom has understood this. There is now a proposal to raise the authorisation threshold for funds to £5 billion, with supervision of the essentials but without micromanagement. No abolition, but a step-by-step proportional regime that does not stifle ambition. That is how it should be. Brussels would do well to follow this example before even more growth capital slips through the net.

The British are putting pressure on Europe: regulatory competition is a fact. It is striking that one of the few advantages of Brexit is becoming apparent in the financial sector. Fortunately, Brussels is not sitting still on this issue. The European Commission recently launched a 'Targeted Consultation on Integration of EU Capital Markets'. The NVP proposes that, in order to be competitive, the threshold should be at least €3 billion. Let us hope that Brussels will show some courage here.

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