EU Plan Helps Startups ‘Unlock Growth Drivers’ to Scale Faster & Go Global

The EU has introduced a new strategy aimed at strengthening its startup ecosystem and improving its global competitiveness in innovation. One initiative it has committed to is creating a public-private fund for deep tech scale-up companies.

Union investment in the so-called Scaleup Europe Fund will come from the European Innovation Council (EIC) Fund, which was established to support startups that have the potential to be scaled into “unicorns” — companies with a valuation exceeding €1 billion. In October, the EU announced a partnership with 71 private investors committed to financing high-growth tech companies. The size of the fund will be at least €10 billion, a European official told Reuters.

The EU Startup and Scaleup Strategy lists 25 other actions to improve conditions for startups and scaleups in the region. The actions fall broadly into five categories:

• Reducing administrative barriers
• Boosting funding
• Making it easier to reach the market
• Attracting and retaining top talent
• Increasing infrastructure accessibility.

“Businesses that are born in Europe must grow in Europe,” Stéphane Séjourné, executive vice-president for Prosperity and Industrial Strategy, said in a statement. “With the launch of the EU Startup and Scaleup Strategy, we unlock growth drivers for Europe’s most innovative and promising companies. We cut red tape, we facilitate their access to financing, we improve their ability to do business across our Single Market.”

SEE: EU Invests €1.3 Billion to Boost AI Adoption & Improve ‘Digital Competencies’

Along with the Scaleup Europe Fund, the new strategy proposes a European 28th regime, an optional set of simplified rules, to reduce legal costs for new companies and help them establish themselves in Europe faster, ideally within 48 hours. The initiative also introduces the European Business Wallet, a secure digital identity solution that will allow startups to efficiently share data with public agencies and cross-border partners.

Other actions include implementing fast-track schemes for residence and work permits, a Charter for Access to make it easier to get hold of research and infrastructure, and an academic career development framework that rewards research commercialisation activities.

Europe desperately wants to shake its reputation of being technologically behind

Europe has earned an unfortunate reputation for falling behind global superpowers in innovation. A 2024 report by former European Central Bank President Mario Draghi, referenced in the context of the new EU strategy, revealed that this innovation shortfall contributed to the US outpacing the EU’s GDP by $9 trillion in 2023. Despite hosting three of the world’s top research investors in tech, Draghi noted that Europe is “failing to translate innovation into commercialisation,” driving many entrepreneurs to relocate to the US.

The EU says that two of the primary reasons startups are not growing in Europe are due to an incomplete Single Market, meaning cross-border business is difficult, and regulatory fragmentation. To the latter point, larger tech companies have been vocal in their agreement. Draghi wrote that “innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.”

SEE: Europe Selects Sites for Seven AI Factories

EU legislation, such as the AI Act and Digital Markets Act, has directly led to a number of artificial intelligence products receiving delayed or cancelled launches in the region. For instance, in April, Meta’s Llama 4 series of AI models was released everywhere except Europe, while its AI chatbots integrated into WhatsApp, Messenger, and Instagram made it to the bloc 18 months after the US.

Similarly, Google’s AI Overviews currently only appear in eight member states, having arrived nine months later than in the States, and both its Bard and Gemini models had delayed European releases. Apple Intelligence has only just become available in the EU with iOS 18.4, after “regulatory uncertainties brought about by the Digital Markets Act” held up its release.

Naturally, Europe represents a significant market for large tech companies, so it’s no surprise they resist legislation that could restrict access or require costly compliance adjustments. While several civil society groups support strict rules to ensure consumer safety, others contend that current regulations fail to go far enough.

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