Startup & Scaleup Strategy of the European Union

The strategy recognizes startups as key drivers of productivity, job creation, innovation, and technological sovereignty, and outlines a framework to make Europe the best place in the world to start, grow, and retain high-impact, technology-driven companies. The European Commission will report on the implementation progress by the end of 2027.

Key Facts and Figures

• Around 35,000 early-stage companies operate across the European Union.
• An additional 3,400 tech companies are currently in their growth phase.
• The European Innovation Council (EIC) Fund is one of the largest deep-tech venture capital funds in the EU, aiming to raise up to EUR 20 billion for startups by 2027.
• The EU financial system remains predominantly bank-centred, with bank assets totalling about 300% of EU GDP, compared to just 85% in the US.
• The relatively small EU venture capital market is the result of a limited equity culture, risk aversion, and fragmented capital markets across Member States.
• Cross-border investments remain low, dampening growth prospects and often leading innovative companies to seek larger markets and simpler financing outside Europe.
• A significant funding gap persists in scaleup financing, particularly for high-risk, capital-intensive technologies requiring investments above EUR 100 million.
• The limited availability of suitable exit options represents a major barrier to venture and growth capital development in the EU. While IPO volumes in Europe have exceeded EUR 320 billion over the past decade, they remain concentrated in a few countries. EU stock market capitalization equals only 55% of EU GDP, compared to 147% in the US, and the EU accounts for just 11% of global IPOs.
• Mergers and acquisitions are also critical for reinvestment and scaling innovation, yet over 60% of European startup buyouts are made by non-EU companies.

• Universities play a key role in the ecosystem — they are behind more than 157,000 spinoffs and alumni-founded startups, with the potential to create up to 6.1 million jobs in the next decade.

   

Key Pillars of the Strategy

1. Innovation-Friendly Regulation

• Introduce a “28th regime” – a harmonized EU corporate legal framework based on digital-by-default principles to simplify company formation, scaling, and cross-border operations within the Single Market.
• Simplify applicable rules and reduce the cost of failure by addressing insolvency, labour, and tax law barriers.
• Enable company establishment in Europe within 48 hours (target: Q1 2026).
• Launch the European Business Wallet, providing a digital identity for all economic operators to enable secure, seamless data sharing across public administrations (target: Q4 2025).
• Adopt the European Innovation Act with regulatory sandboxes.
• Reduce regulatory burdens by 25–35%.
• Support fast company registration and fully digital business operations.

2. Better Access to Finance

• Expand the European Innovation Council (EIC) and launch the Scaleup Europe Fund to close major funding gaps, especially in deep tech.
• Promote institutional investments, business angel networks, and cross-border venture funding.
• Develop IP valuation frameworks and address gender gaps in access to finance.

3. Fast Market Uptake and Expansion

• Promote academic spinoffs through the “Lab to Unicorn” initiative.
• Facilitate innovation-friendly procurement (public and private).
• Strengthen support through networks such as EEN and EIT.
• Reduce barriers to commercializing research outcomes.

4. Support for the Best Talent

• Launch the Blue Carpet Initiative to attract and retain highly skilled, diverse talent.
• Harmonize employee stock option schemes across Member States.
• Improve entrepreneurial education and remote work policies.
• Establish visa schemes and fast-track systems for non-EU founders.

5. Access to Infrastructure, Networks and Services

• Provide startups with better access to research infrastructure, AI computing facilities, and testing environments.
• Simplify administrative procedures and state aid rules.
• Establish a digital one-stop-shop for startups and investors.

6. Measuring Progress

• Propose harmonized definitions for startups and scaleups.
• Create a Startup and Scaleup Scoreboard with key performance indicators (KPIs) such as the number of startups, centaurs (€100M+), and unicorns (€1B+).
• Conduct an annual survey of founder experiences.

Complementary Measures and Financial Instruments

• The Scaleup Europe Fund will operate in close cooperation with InvestEU and complement initiatives such as the European Tech Champions Initiative and other instruments of the EIB Group (target: 2026).
• The European Commission, together with the EIB Group, will engage large institutional investors to develop a voluntary European Innovation Investment Pact, enabling participants to allocate part of their assets under management into EU funds of funds, venture capital funds, and unlisted scaleups (target: 2026).
• The Commission will also leverage and reinforce existing instruments and design new mechanisms to invest in European security and defence startups and scaleups, consistent with the White Paper on Defence and the upcoming Omnibus Defence Simplification Package. These instruments will include flexible and adaptive funding models for emerging defence innovators, including those from Ukraine, as well as targeted support for individual entities and a broadened scope of EU funding options, including equity and debt instruments (target: 2026).