When key parties from the Danish pensions industry emerged from their meeting with the economics and business affairs minister Brian Mikkelsen back in August 2010, they declared themselves optimistic that somehow they would work together to put together DKK5bn (€670m) of funding to help small and medium-sized enterprises in their time of need.

But just what shape the multi-party vehicle will assume is still anyone's guess. The initial name ‘venture capital fund' may prove to be a misnomer - few of the investments may be, strictly speaking, venture capital and, as ATP CEO Lars Rohde said at the time, it may not even be a fund in the traditional sense.

Discussions about the architecture of the investment vehicle are continuing, and nothing has yet been finalised, Rohde says, expecting the talks to conclude in the late autumn. "We expect there will be some kind of support, particularly for small and medium-sized enterprises, within what is allowed under the EU regulations."

Forsikring og Pension's Peter Damgaard Jensen agrees government support is vital: "What's very important for the pensions sector is that there is government money contained within the funding, because we [pension funds] have tried to invest in this sector - small and medium-sized enterprises - and we haven't had good results."

The problem is that the sheer volume of work entailed in conducting due diligence on the many individual businesses makes the investments expensive to begin with, and the risk-return profile is unsatisfactory for pension funds, he explains.

But hopes are higher for the proposed multi-investor fund, as long as it is established in a workable way. "It's very important to use the set-ups that exist for venture capital," Damgaard Jensen stresses.

"That would be good because they have experience with this investment sector, and then it wouldn't be necessary to create a whole new set up. Then we can tell our members that this project would be comparable to existing venture capital funds."

Jannick Nytoft, CEO of the Danish Venture Capital & Private Equity Association, says the eventual vehicle could be structured as a new fund of funds, or use some other mechanism or scheme.

"A technical team is working on it; what will come of this, no one knows," he says. Most of the companies to benefit from the funding will be ordinary SMEs, and not those from the IT and biotech sectors generally targeted by venture capital, he says.

"They will not necessarily be growth companies. What we have heard is that  DKK500-600m of the total will be venture capital," says Nytoft.

Success depends on the kind of risk the funds are expected to take on. Lower risk suits pension funds better, says Damgaard Jensen. "If it's higher risk, then we would need higher returns. But I don't think that, as pension funds, we would be comfortable with heightened levels of risk."

Whatever the shape of the new vehicle, the main parties are keen to spread the investment between the pension funds.

Rohde sees a large number of the country's pension funds joining in with the new venture capital fund - not because of any pressure of overdeveloped sense of social responsibility, but simply because it pays.

"Hopefully this will be so attractive that others will want to be involved," he says.