The EU’s Startup and Scaleup Strategy: Driving Innovation and Growth Across Europe

Editor’s Note: Europe is opening a new chapter for innovation with the launch of its Startup and Scaleup Strategy—Choose Europe to Start and Scale. This ambitious initiative is designed to eliminate longstanding barriers to growth, making it easier for entrepreneurs to build, fund, and expand their businesses within the EU. From harmonized regulations and streamlined business identities to increased access to venture capital and talent, the strategy lays the foundation for a truly integrated innovation economy. For founders, investors, and innovation stakeholders, this means a clearer path from idea to impact, backed by a coordinated, cross-border framework that encourages bold ambition and sustained growth. Whether you’re building the next unicorn or enabling the digital infrastructure behind it, the benefits of this strategic shift are both practical and profound.

Industry News – Investment Beat

The EU’s Startup and Scaleup Strategy: Driving Innovation and Growth Across Europe

ComplexDiscovery Staff

In a strong move to reshape its innovation economy, the European Commission has launched a new Startup and Scaleup Strategy under the title “Choose Europe to Start and Scale.” Announced on May 27, 2025, the initiative positions itself as a cornerstone of the broader “Choose Europe” framework, a cross-sector effort spearheaded by Commission President Ursula von der Leyen. This strategy carries an explicit promise: to transform Europe into a prime destination for technology-driven startups that not only begin in Europe but stay, scale, and succeed globally.

The underlying rationale for the new strategy stems from a persistent frustration shared by many founders and investors alike. Despite Europe’s abundance of talent, academic excellence, and early-stage innovation, startups across the continent often fail to cross the chasm to sustained growth. For years, too many promising ventures either stalled before commercialization or relocated to jurisdictions with more favorable regulatory and financing ecosystems.

According to the Commission’s staff working document accompanying the launch, the current landscape is marked by barriers that start at inception and persist through each stage of growth. Entrepreneurs encounter fragmented regulatory regimes, uneven access to infrastructure, and significant disparities in tax and labor laws across Member States. Efforts to address these through earlier initiatives in 2016 fell short of delivering the structural coherence needed to compete with startup hubs in the United States or Asia.

The new Strategy breaks from past incrementalism by offering a full-spectrum approach that stretches from lab bench to boardroom. At the heart of the proposal is a commitment to reduce administrative burdens and legal inconsistencies by establishing a harmonized “28th regime.” This regulatory overlay is designed to allow companies to opt into simplified rules across key areas like insolvency and taxation, providing legal clarity and operational efficiency without overriding national laws. Complementing this is the European Business Wallet, a digital identity mechanism for businesses that promise to streamline public interactions across borders.

Beyond regulatory clarity, the Commission has placed a strong emphasis on capital. Europe’s venture capital ecosystem, while maturing, remains relatively small and geographically fragmented. Even though venture investments have rebounded since the COVID-19 era downturn, the EU still trails behind the United States not only in total capital raised but also in the size and maturity of its funds. As of 2025, Europe has 110 unicorns—companies valued at over $1 billion—compared to 687 in the U.S.

The Strategy aims to close this scaleup gap by expanding the European Innovation Council and introducing a new Scaleup Europe Fund. Furthermore, it calls for the creation of a European Innovation Investment Pact. The pact would encourage large institutional investors, such as pension funds, to channel more capital into high-growth tech ventures—a critical missing piece in the current financial puzzle.

Market access remains another focus of reform. To counteract the long gestation period many European innovations endure before commercialization, the Commission has introduced the Lab to Unicorn initiative. This aims to foster closer collaboration between academic institutions and startups by standardizing licensing, revenue sharing, and equity participation rules. Paired with guidance on state aid and intellectual property, the move seeks to accelerate the journey from invention to product.

But capital and IP are only part of the equation. Talent—arguably the most portable of assets—continues to be a major pressure point. European startups frequently report difficulty hiring and retaining the highly skilled workers they need to grow. The Blue Carpet initiative is a central element of the Strategy’s response. It addresses entrepreneurial education and the tax treatment of stock options and aims to simplify employment across borders. By advancing reforms to the Blue Card Directive and encouraging Member States to offer fast-track residency to non-EU founders, the EU hopes to stem its talent outflow and position itself as a magnet for global entrepreneurship.

Perhaps the most quietly transformative part of the Strategy is its focus on infrastructure and ecosystem connectivity. Too often, founders choose to relocate not for talent or finance but because the local ecosystem lacks density, cohesion, and network access. The Strategy addresses this by proposing a Charter of Access to simplify engagement with research and technology infrastructure. It also elevates the role of clusters and accelerators as connective tissue between innovation actors across regions. In Europe, where the innovation economy has historically been uneven, such systemic efforts could provide the cohesion necessary for startups to thrive.

Moreover, the Strategy speaks directly to the cultural and systemic inertia that has long plagued entrepreneurship in Europe. Across the Atlantic, risk-taking is lauded, and failure is often reframed as a stepping stone. In contrast, many European founders still face stigma after a failed venture. The Commission does not shy away from this cultural gap. Through measures that improve second-chance laws and reduce the punitive consequences of failure, it seeks to normalize entrepreneurial risk.

Gender and inclusion challenges are also part of the picture. The staff working document reveals a stark reality: as of 2023, just three percent of all VC investment went to all-women teams, and fewer than a quarter of deep tech startups have a woman on the founding team. While specific funding or quota measures are not central to the Strategy, ongoing support from entities like the European Innovation Council’s Women Leadership Programme will continue, alongside broader calls for diversity in both startups and capital firms.

In sum, the EU Startup and Scaleup Strategy is more than a policy announcement—it’s a statement of intent. It recognizes the systemic disadvantages that European founders face and proposes a structure that not only addresses their symptoms but also attempts to redesign the operating environment. From regulatory regimes to data access and from procurement reform to deep-tech finance, the initiative sketches a blueprint for a Europe that wants to lead, not follow, in the global innovation race.

Whether it succeeds will depend not just on Commission action but on coordinated implementation across Member States, uptake by private capital, and trust from entrepreneurs themselves. The question remains: Will they choose Europe?

News Sources

• Commission launches ambitious Strategy to make Europe a startup and scaleup powerhouse (European Commission)
• Commission Staff Working Document on the EU Startup and Scaleup Strategy (European Commission)

Assisted by GAI and LLM Technologies

Additional Reading

• Wired for Progress: How Ireland and OpenAI Are Scaling Intelligence, Infrastructure, and Innovation
• When Founders Have Red Lines: Investing Beyond ROI at Latitude59
• At Latitude59, Estonia Challenges Europe: Innovate Boldly or Be Left Behind
• “Bee vs. Elephant”: Estonia’s Agile Strategy Headlines Latitude59

Source: ComplexDiscovery OÜ