A New Dawn for European Startups and Scaleups?
The European Commission has launched its ambitious “EU Startup and Scaleup Strategy,” a comprehensive 26-measure plan signaling a serious commitment to transforming Europe into a global innovation powerhouse. This “Choose Europe to Start and Scale” initiative, aligning with urgent calls for reform from figures like Mario Draghi and Enrico Letta to boost European competitiveness, directly addresses why many startups struggle to transition from lab to market or scale up within the EU.
More on the Strategy: A Deeper Dive
The strategy tackles key bottlenecks across five core pillars:
- Cutting Red Tape: A “European 28th regime” (targeted Q1 2026) aims for simpler, harmonized rules in areas like insolvency, labor, and tax law. The Commission is even exploring ways to enable company establishment within 48 hours. A “European Business Wallet” (Q4 2025) will facilitate seamless digital interactions, and the upcoming European Innovation Act will promote regulatory sandboxes.
- Unlocking Capital: The strategy seeks more integrated EU venture capital markets. It involves expanding and simplifying the European Innovation Council (EIC). A new Scaleup Europe Fund, co-financed with private investors, will specifically target deep tech’s need for “patient capital” – investments sometimes requiring 15-17 year horizons. This complements broader efforts like the Savings and Investments Union.
- Lab to Market, Faster: The “Lab to Unicorn” initiative (2026) aims to bridge the gap where Europe, rich in research, underperforms in company creation. It includes European Startup and Scaleup Hubs, blueprints for IP commercialization for academic institutions, and support for “venture builders” in public institutions.
- Talent Magnet: The “Blue Carpet” initiative (2025-2026) will focus on entrepreneurial education, improving employee stock option taxation, and simplifying cross-border employment, including eliminating tax obstacles for remote workers. Fast-track visas for non-EU founders are also encouraged, and a blueprint for academic career development will reward commercialization activities.
- Access to Infrastructure & Markets: A “Charter of Access” will simplify startup access to technology and research infrastructures, with clarifications on state aid rules. Pro-innovation procurement measures are also planned, possibly including a European preference in defence and security fields.
The strategy targets strategic technologies like AI, quantum, advanced semiconductors, biotech, and cleantech.
First Impressions: Hope and Realism
Initial reactions are cautiously optimistic. EIC Board Member Bart Becks highlights that while some areas like the “28th regime” need national adoption, many measures can be rolled out by the Commission within 12-18 months. He praises the EIC’s current effectiveness due to its governance by entrepreneurs and investors and sees the “Lab to Unicorn” initiative as vital. However, he stresses the need to “test, iterate, and adapt” regulations, much like a startup. Commissioner Zaharieva asserts the goal is “removing the barriers that hold our entrepreneurs back”, while EVP Séjourné aims to “put Europe right in the middle of the global innovation map”. There’s also an undercurrent of enhancing Europe’s digital sovereignty by fostering homegrown successes. The extensive stakeholder consultation, with over 600 contributions, suggests broad input into its design.
Context: EU Startup Scene & Future Frameworks (FP10)
This strategy arrives at a crucial time. While past EU framework programmes (like Horizon 2020 and Horizon Europe) have supported thousands of startups and generated significant economic value, reports indicate that only a small percentage of the overall R&I budget typically reaches startups directly. Deep tech, a key focus of the new strategy, shows resilience and growth in Europe, but still faces challenges in late-stage funding, often relying on non-European investors. The EU has seen a rise in unicorns, yet still lags behind the US and parts of Asia in overall numbers and venture capital raised.
Looking ahead, this strategy will inevitably interact with the planning for FP10 (the 10th Framework Programme for Research and Innovation, succeeding Horizon Europe around 2028). Discussions around FP10 emphasize the need for greater impact, streamlined processes, better alignment between EU and national funding, and a reinforced innovation lifecycle from basic research to market uptake. Calls for FP10 to be ambitious, leverage public funding to crowd in private investment, and simplify pathways for dynamic businesses like startups and scaleups are prominent. The new Startup and Scaleup Strategy, with its focus on exactly these issues, can be seen as a foundational element, aiming to create a more receptive and fertile ground for the innovations FP10 will seek to foster. The emphasis on a “seamless flow from fundamental research to applied research to start-ups to scale-up” is a shared theme.
The Hungarian Perspective: Navigating Opportunities and Challenges
Hungary has its own national efforts, including a Digital Startup Strategy and various programs run by the Hungarian Innovation Agency, to bolster its growing startup ecosystem. The new EU strategy’s focus on reducing fragmentation, boosting scaleup finance, and improving talent mobility aligns well with addressing local needs. The potential activation of underrepresented regions, as highlighted by Becks, offers a positive outlook.
However, a significant challenge for Hungary is the current restriction on certain Hungarian institutions, including many universities designated as public interest trusts, from directly accessing new EU funding from programs like Horizon Europe. This situation, stemming from rule of law concerns, has been ongoing since late 2022. While Hungarian entities can still participate in projects, the inability for key institutions to receive direct EU funds could temper the full impact of EU-level initiatives like this new strategy and Horizon Europe within the country, pending a resolution with the European Commission.
The Path Forward: Execution is Key
The ambition of the EU Startup and Scaleup Strategy is clear. Its success will ultimately depend on diligent implementation at both EU and national levels, genuine simplification, and the effective mobilization of capital and talent. If Europe can indeed become the best place to “Choose Europe to Start and Scale”, the ripple effects on innovation, job creation, and competitiveness will be profound.
Picture: Ekaterina Zaharieva COMMISSIONER (2024-2029) | Startups, Research and Innovation, source: European Committee of the Regions / Flickr
