Disciplining venture capital? The remaking of innovation financing in the EU

As Europe continues to rely on private venture capital (VC) to finance innovation, policymakers are increasingly seeking to steer investment toward political and societal goals. This article examines how the governance infrastructures built around financial intermediaries complicate these attempts to direct innovation finance. Bridging scholarship on the infrastructural power of finance with industrial policy research, it analyzes how bureaucratic actors exert influence through institutional authority, sectoral coalitions, and discursive framing. Empirically, the article examines the European Innovation Council (EIC) Fund (2018–2024), the European Union’s first attempt to use direct equity to influence VC markets. Drawing on interviews and secondary sources, the paper traces the Fund’s attempt to influence capital allocation and demonstrates how financial and budgetary officials leveraged their expertise and pre-existing professional links with the VC sector against the mandate of innovation-oriented bureaucrats. The article therefore shows how financial power operates not only through market-based governance infrastructures but through bureaucratic autonomy and contestation within the state, revealing the politically constructed nature of the subordination of innovation objectives to financial logics.