EU Introduces Strategy to Boost Tech Start-Ups Growth
Brussels, June 2025 – The European Commission has published a far-reaching roadmap designed to strengthen Europe’s position in the global tech race. Unveiled on June 18 under the Choose Europe banner, the strategy targets a rapid scaling of innovative small and medium-sized enterprises (SMEs) by tackling finance, infrastructure and regulatory hurdles.
Key Actions to Bridge the Funding Gap
Despite hosting 8% of the world’s start-ups, the EU trails the US and China in venture capital (VC) investment. A 2024 report by former Italian premier Mario Draghi highlighted that only 6% of global AI funding goes to EU companies, versus 61% in the US and 17% in China. To narrow this disparity, the Commission proposes:
- Public-Private Scale-Up Fund: Launching in Q1 2026, this vehicle will pool up to €20 billion from EU budgets, national promotional banks (NPBs) and private investors. It will deploy equity and quasi-equity instruments to companies post-Series A.
- InvestEU Integration: Channeling existing €26 billion in the InvestEU programme into dedicated tech and deep-tech windows, allowing faster co-investment and lower guarantee thresholds.
- Pan-European VC Networks: Incentivising cross-border VC syndicates via tax credits and soft guarantees to reduce regional concentration of capital.
Simplifying Cross-Border Operations
Administrative fragmentation across 27 member states remains a barrier. The Commission’s proposals include:
- 24-Hour Company Registration: A digital one-stop portal enabling founders to incorporate anywhere in the EU within a single day, leveraging eIDAS electronic signatures.
- Unified Insolvency Framework: Harmonising early-stage insolvency rules to cap failure costs and facilitate second attempts by entrepreneurs.
- Single Business Regime: Establishing a voluntary European Limited Liability Company (EuropECo) with uniform governance, accounting and reporting standards.
Deep Dive: Digital Infrastructure and Cloud Services
Robust digital backbone is critical for scale-ups handling petabyte-scale data and AI workloads. Key technical measures include:
- GAIA-X Integration: Ensuring all public cloud funding requires compliance with GAIA-X Federation Services, guaranteeing data sovereignty and interoperability.
- 5G Corridor Expansion: Extending the Digital Decade 5G corridors to cover 95% of EU territory by 2027, crucial for IoT, autonomous vehicles and edge computing applications.
- HPC and Quantum Hubs: Co-investment in five new high-performance computing (HPC) centres and two quantum research testbeds under the EuroHPC Joint Undertaking.
Market Integration through the Digital Single Market
By removing national silos, the Commission seeks to create a truly borderless market for digital goods and services:
- Cross-Border E-Invoicing: Mandating a single e-invoicing standard (EN 16931) across all member states by 2026 to accelerate B2B payments.
- Interoperable Public Services: Scaling up the eIDAS 2.0 framework so that start-ups can access public grants and procurement portals EU-wide with one digital identity.
Expert Perspectives: Driving Innovation and Economic Growth
“Capital matters, and Europe has it. We need to connect it to innovators,” Commissioner for Innovation Ekaterina Zaharieva stated at the launch. “By teaming up with private investors, we will tackle key challenges and reduce market fragmentation.”
“This is a milestone. A €20 billion scale-up fund will finally give our deep-tech companies room to breathe,” said Maria López, Partner at Pan-European VC firm NovaGrowth.
Outlook and Next Steps
The legislative package will enter the European Parliament and Council review in July 2025, with provisional adoption expected by late 2025. Member states are already aligning national innovation agencies to co-fund the PPP vehicle. If adopted on schedule, the first disbursements to eligible scale-ups could occur as early as Q2 2026.
Additional Analysis: Monitoring Progress and Impact Metrics
To ensure accountability, the Commission will publish annual Start-Up Ecosystem Health Check reports, tracking:
- Venture capital inflows by sector and stage
- Time-to-market metrics for cross-border product launches
- Rate of insolvency versus successful exit