The European Commission has presented the EU Startup and Scaleup Strategy, aimed at positioning Europe as the most attractive place for tech startups and scaleups. Despite significant growth in venture capital (VC) investments in recent years, Europe continues to face several challenges, such as financial market fragmentation, low institutional investor participation, and the lack of a common tech index at the European level, which limits financing options for emerging companies, especially those requiring high-risk investments and capital-intensive funding.
Despite supportive policies such as InvestEU and the European Innovation Council (EIC), European startups still face significant challenges in accessing financing, particularly those in the scaling phase who need over 100 million euros to grow and compete globally. This financing gap threatens Europe’s competitiveness, particularly in key technological areas.
Europe remains relatively small compared to the U.S. and Asia in terms of venture capital, largely due to financial fragmentation and limited participation from institutional investors. In fact, pension funds in the EU account for only 7% of VC funding, compared to 20% in the U.S.
The European Commission has proposed several key initiatives to address this gap and improve conditions for startups and scaleups:
The Commission plans to expand and simplify EIC rules to support high-risk innovations, broadening its network of trusted investors (expected in 2025).
A fund will be created to cover financing for deep tech and other emerging technologies requiring investments above 100 million euros (2026).
The Commission will collaborate with institutional investors to foster investment in startups and scaleups in strategic sectors such as biotechnology, semiconductors, and clean technologies (2026)
The Commission will support business angels and their networks to facilitate early-stage funding for young startups (2026).
The Commission will address IP valuation as a tool for financing backed by intangible assets, making it easier for startups to access more resources (Q2 2027).
One of the main challenges for European startups is the global competition for qualified talent. Lack of cross-border mobility and legal framework differences make it difficult to attract key employees. To address this, the European Commission will launch the Blue Carpet Initiative (2025-2026), simplifying visa and residence processes for highly qualified entrepreneurs and researchers.
Access to research and technology infrastructures is crucial for startups needing to validate and scale their products. The European Commission proposes a Charter of Access to simplify contracts and facilitate access to these infrastructures. In addition, a EU Innovation Platform will be created to help startups access financing, acceleration services, and talent.
The EU Startup and Scaleup Strategy is a comprehensive response to the challenges these companies face. With measures including regulatory simplification, increased access to finance, and talent attraction, the EU seeks to create a more favorable environment for tech startups. If successfully implemented, these proposals will allow Europe to compete more effectively in the global market, fostering a dynamic and sustainable ecosystem that strengthens the continent’s competitiveness and technological sovereignty.
The future of startups and scaleups in Europe depends on the effective implementation of this strategy, ensuring that Europe remains a leader in innovation and a key destination for entrepreneurs and investors worldwide.
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