Brussels hands its €5bn scale-up fund to Stockholm private equity giant EQT

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Capital will be focused on artificial intelligence, quantum technologies, biotechnology and clean tech, but investment decisions will be made independently by EQT. (Source: Wikimedia)

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By Wester van Gaal,
Amsterdam
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The European Commission has completed the legal steps needed to launch the Scaleup Europe Fund, a €5bn scheme designed to keep Europe’s most promising technology firms from moving to the United States or China. 

Management of the fund will be handled by EQT, a Stockholm-based private equity group.

Capital will be focused on artificial intelligence, quantum technologies, biotechnology and clean tech, which the commission calls “strategic deep tech”, and the first investments are expected within weeks.

But investment decisions will be made independently and “on market terms”, according to information shared by the commission on Tuesday 4 August). 

The fund, first floated by commission president Ursula von der Leyen in her 2025 State of the Union address, is part of the European Innovation Council Fund.

EQT was selected after a competitive tender process earlier this year. Other candidates included London-based venture capital firm Atomico and French investment company Eurazeo.

Backers of the new fund include pension funds, state-linked investment arms and family offices, including Denmark’s export and investment fund EIFO, APG (on behalf of Dutch pension fund ABP) and insurer Allianz.

Europe already produces a steady stream of startups, but at the scaling-up stage many leave for the US which has larger venture funds. The commission’s answer is to let a commercially run fund compete for that stage of financing.

EQT was founded in Stockholm in 1994 and grew out of Investor AB, the holding company of Sweden’s Wallenberg family.

The Wallenbergs are the country's most influential industrial dynasty, with historic ties to telecoms group Ericsson, industrial equipment maker Atlas Copco and bank SEB.

The commission previously said it chose EQT because of its technology investing record, its ability to raise additional private capital accross Europe, and its shared ambition to "scale deep-tech innovation in Europe". 

The firm, however, is best known for buying established, profitable companies. It is one of the world's largest private equity firms today. It raised $134.4bn [€116,7bn] in private equity capital over the past five years, second only to New York's KKR and ahead of Blackstone.

And its core business remains buyouts of mature, cash-generating companies rather than venture and growth investing. 

Its portfolio includes companies such as private schools operator Nord Anglia Education, chemicals distributor Azelis, mortgage bank Enity, data-centre operator EdgeConneX and refrigeration firm Beijer Ref. 

EQT also runs a smaller growth and venture arm, EQT Ventures, with roughly €2bn under management. Notable investments include autonomous trucking firm Einride and micromobility operator Voi.

Deep tech?

The firm's published list of current holdings runs into the hundreds.

A handful fall within the "deep-tech" categories the new fund is meant to target, including quantum computing firm SEEQC, fusion energy developers Marvel Fusion and EX-Fusion, electric aircraft maker Heart Aerospace, and battery manufacturer Verkor.

A larger share of the portfolio is in biotech and pharma, much of which came from specialist investor LSP which EQT acquired in 2022.

Business software makes up the largest part of the technological portfolio, including content management platform Sitecore, payments processor Mollie and second-hand fashion marketplace Vinted.

Several more recent additions are branded as AI, such as Harvey (legal AI) and Parloa (customer-service AI agents), though both built their services on existing AI models rather than developing frontier AI capabilities themselves. 

Whether EQT’s track record matches the technical ambitions of the EU’s scale-up fund will become clearer in the coming weeks, as the first investment decisions are announced.

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Capital will be focused on artificial intelligence, quantum technologies, biotechnology and clean tech, but investment decisions will be made independently by EQT. (Source: Wikimedia)

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Author Bio

Wester van Gaal is our economics editor. He joined EUobserver in September 2021. Previously, he was editor-in-chief of Motherboard, Vice Media’s technology and science website, and worked as a climate economy journalist for The Correspondent. He is based in Amsterdam, the Netherlands.

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