U.S. venture capital dwarf their European rivals
France wants EU to revive capital markets union
Fragmented EU markets hold back startup financing

PARIS, May 27 Reuters France is banking on a new push to integrate the European Union39;s fragmented capital markets to give them the scale needed to wean its flourishing startup sector off of dominant U.S. venture capital, ministers, CEOs and investors said.

A hodgepodge of local regulations and oversight has kept Europe39;s financial markets largely shaped by national borders, preventing the emergence of deep capital markets to rival the United States.

For startups in France and elsewhere in European Union that means they almost inevitably turn to U.S. venture capital private equity funding of early stage promising companies to fund growth as there simply is not enough big investors at home.

While the U.S. funding is welcome, the result is a missed opportunity for Europe, said Matthieu Rouif, CEO of French startup Photoroom, which recently raised 43 million from UK fund Balderton and Silicon Valley39;s Y Combinator.

A huge amount of wealth has been created over the past 20 years, created off the back of tech innovation, and the fact Europeans don39;t have access to that is a big issue, he said at the Viva Technology fair in Paris last week.

The 10 biggest venture capital firms are all from the United States and dwarf their European rivals in the amounts of money they can raise for investment, according to the…