At the latest since the Lehmann bankruptcy and the open outbreak of the financial crisis, it has become clear that the venture capital and private equity industry, which is not responsible for this crisis but has taken advantage of the banks' freedom of movement in granting acquisition loans to engage in sometimes excessive leveraging and recaps, can no longer avoid Europe-wide regulation. The critical question is what such regulation will look like, or should look like in a meaningful way.

In April 2009, as part of the G20 group's effort to create a more stable global financial order, the European Commission presented a proposal to regulate all Alternative Investment Fund Managers (AIFM Directive). This directive is intended to subject all managers of alternative investment funds, which include in particular hedge funds, private equity and venture capital funds, mezzanine funds and other fund vehicles launched by private providers, to uniform supervision throughout Europe.

Why do we supposedly need Europe-wide regulation?

In addition to the banks, hedge funds and private equity funds in particular were held responsible by politicians for causing the financial crisis. Politicians assume that the operation of such funds creates a "systemic risk" that urgently requires state regulation. While it is obvious that the rating agencies failed in the run-up to the financial crisis and that many banks had too little equity capital and, in particular, too many risky credit exposures, hedge funds were criticized for having accumulated very high default risks through short selling, equity borrowing and leveraged financing of their corporate holdings at the fund level. In contrast, this was not the case for private equity funds, as private equity and venture capital funds make their equity investments at fund level exclusively from the equity collected from investors.