On 28 May 2025, the European Commission adopted its EU Startup and Scaleup Strategy (the "Strategy") - a coordinated EU-level framework designed to support the creation, growth and internationalisation of innovative startups and scaleups. The Strategy sets out 26 legislative, regulatory and financial measures intended to transform Europe into a global leader in tech-driven entrepreneurship.
The Strategy in a nutshell
Between 2008 and 2021, nearly 30 % of European unicorns relocated outside the EU, and only 8 % of global scaleups are Europe-based. In response, the Strategy focuses on five priority areas: fostering innovation-friendly regulation, improving access to finance, accelerating market uptake, attracting and retaining talent, and ensuring startups can access infrastructure and innovation ecosystems across Europe.
Regulatory and structural reforms
To address fragmentation within the Single Market, the Commission will propose an optional “28th regime”: a standalone EU-wide corporate legal framework tailored to startups and scaleups. This regime will operate in parallel with national company laws and offer simplified procedures across Member States. It is expected to reduce the cost of failure, streamline legal and tax obligations, and allow for incorporation within 48 hours (Q1 2026).
A European Business Wallet will be introduced by Q4 2025. This tool will provide all EU economic operators with a digital identity and a secure way to share verified data and credentials, facilitating cross-border interaction with administrations.
The upcoming European Innovation Act (Q1 2026) will create an EU framework for regulatory sandboxes – supervised environments where new products, services or models, can be tested without triggering all regulatory requirements. This may offer fund managers opportunities to support early-stage ventures in sensitive sectors (e.g. fintech, AI, biotech), under some conditions.
The Act will also introduce a voluntary Innovation Stress Test. This tool will help Member States assess whether new or revised laws could unintentionally hinder innovation.
Further reforms are planned in strategic sectors. The Commission will introduce or revise legislation to reduce regulatory complexity in biotechnology, life sciences, advanced materials and defence (starting 2025). It will also revise the Standardisation Regulation by Q2 2026 to make EU standards more accessible to startups and SMEs.
Better finance for startups and scaleups
The Strategy confirms that access to late-stage and scaleup capital remains a structural weakness across the EU. To address this, the Commission will support the launch of the Scaleup Europe Fund in 2026. This fund will be structured as a market-based, privately managed and co-financed vehicle. It will focus on direct equity investments in strategic sectors such as deep tech, AI, semiconductors, and biotechnology—areas typically requiring funding rounds above EUR 50 million. These are capital-intensive technologies where EU companies still rely heavily on non-European investors.
The Scaleup Europe Fund will complement existing initiatives such as InvestEU and the European Tech Champions Initiative (ETCI), and will be anchored operationally and financially by the European Investment Bank Group (EIB). This initiative seeks to help EU-based scaleups stay and expand within the Single Market.
In parallel, the Commission will develop a European Innovation Investment Pact, expected in 2026. Coordinated with the EIB Group and institutional investors (notably pension funds and insurers), the Pact will encourage long-term voluntary commitments to invest in EU venture capital funds, fund-of-funds structures and unlisted scaleups. Its objective is to channel private capital into high-growth sectors and deepen the EU private investment ecosystem.
Finally, the Commission will revise the definition of “undertaking in difficulty” under EU State aid rules (Q2 2025), which currently excludes many growth-stage companies—particularly in capital-intensive industries—from public support schemes. The reform aims to enable these companies to benefit from co-investment mechanisms without being mischaracterised as distressed entities.
The Commission will report on the implementation of the Strategy by end-2027 and calls on the European Parliament, the Council and Member States to fully support the 26 announced measures.
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