Brexit threatens to burn Britain's bridge with a vital EU institution that's invested billions into British startups

The future of a crucial source of UK startup money hangs in the balance following the nation's decision to leave the European Union.

That source is the relatively unknown European Investment Fund (EIF), which is an institution that was created by the EU in 1994 and operates out of Luxembourg with a team of around 400 people.

The EIF, which has commercial banks and other financial entities among its shareholders, invested over €2.3 billion (£2 billion) in UK startups between 2011 and 2015, according to industry data cited by The Financial Times on Tuesday. That reportedly accounts for over a third of all such investment.

EIF capital finds its way to UK startups via a network of venture capital institutions that back fledgling technology companies that they think are destined for success with billions of pounds.

The Financial Times reported that the EIF gave money to 144 UK-based venture capital companies or similar entities between 2011 and 2015. That makes it one of the largest, if not the biggest, investor in UK venture capital funds and growth-capital funds, according to Michael Collins, deputy chief executive of Invest Europe.

Venture capital companies also receive funding from pension funds, insurance companies, and other institutional investors but these sources are less reliable and prone to shying away from startup investments during times of economic uncertainty, such as the 2008 financial crisis.

The EIF has made at least one investment into a UK-based fund following the EU referendum but it's unknown whether these kinds of deals will continue given that it's only allowed to fund EU nations, members of the European Free Trade Association, and countries that could potentially join the EU.

The closest thing to the EIF in the UK is the British Business Bank, which was formed by the coalition government in 2014.

Alex Depledge, an entrepreneur-in-residence at Mayfair venture capital firm Index Ventures told Business Insider last month: "Given EIF funds 85% of funds in London, the British Business Bank must step in or we will see a big decline in funding."