The European Commission has unveiled ambitious plans to cut red tape and make the EU a more attractive place for tech businesses to scale. 

Launched today, the EU Startup and Scaleup Strategy comes as the bloc scrambles to attract and retain tech startups amid stiff competition from the US and Asia. 

Under the new initiative, the EU has laid out a five-point plan to close the gap with its rivals. It’s also in talks to deploy a public-private fund of at least €10bn under the new strategy, Reuters reports. 

Here’s the lowdown:

1. Making rules less painful

European startups regularly express frustrations that EU regulation holds them back.

To ease that, the EU wants to create a “28th regime” — essentially a simplified legal framework for companies to operate under a single set of rules across the 27 member states. It’s meant to reduce headaches around things like taxes, employment rules, or insolvency. 

There’s also a new digital ID, the European Business Wallet, scheduled for rollout during the fourth quarter of this year. The ID is meant to make it easier and faster to deal with public administrations by providing a digital identity and data exchange system that reduces paperwork and manual verification. For example, a startup using the wallet could instantly share verified credentials with a government agency, potentially skipping weeks of paperwork.   

Additionally, the upcoming European Innovation Act, scheduled to come into force in 2026, will offer startups more “regulatory sandboxes” where they can safely test new ideas without tripping over outdated rules. 

2. Closing the funding gap

In 2024, US startups raised $178bn, more than triple the $51bn figure for European companies, according to Crunchbase. 

The EU proposes three measures to close the gap. 

The first is the Savings and Investments Union, designed to channel more household savings and private capital into European businesses. It aims to do this through mechanisms such as lowering the transaction costs of cross-border investments to attract more outside capital and simplifying insolvency laws to give investors greater confidence in backing a startup that might go belly up.

Secondly, it plans to “expand and simplify” the European Innovation Council, the EU body that gives startups access to the funding and coaching they need to scale. 

Thirdly, it looks to develop an Innovation Investment Pact, a voluntary initiative designed to entice big institutional investors to back EU funds, venture capital firms, and scaleups. It aims to do this by lowering the complexity, cost, and risks of investing in smaller funds and companies — making it easier for the big fish to fund the little guys. 

Combined, the idea is to make it a lot easier for European startups to grow without relocating abroad.

3. Helping ideas leave the lab

While Europe is known for world-class research, that doesn’t always translate to world-class businesses. 

The EU wants to change that with a “Lab to Unicorn” initiative that connects startups with universities across Europe. The idea is to make it easier — and fairer — to turn academic research into spinouts. It will include guidance on licensing intellectual property, sharing revenue or equity, and commercialising cutting-edge research.

4. Attracting world-class talent

Hiring skilled people — especially across borders — is often a major barrier for European startups. 

The EU’s “Blue Carpet” plans to streamline hiring of international talent. The initiative will focus on entrepreneurial education, better employee stock options, and cross-border employment. The bloc is also pushing for a Blue Card Directive, which will encourage member states to fast-track visas for non-EU founders. If it works, startups might find it easier to build international teams, keep top talent, and relocate themselves. 

5. Opening up critical infrastructure

Finally, the EU wants to make it easier for startups to access high-end research labs and tech infrastructure — the kind of facilities usually reserved for big players. A new Charter of Access will aim to standardise and simplify this process, so startups can tap into these resources more easily and bring products to market faster.

Ekaterina Zaharieva, European Commissioner for Startups, Research, and Innovation, said the five-point plan would “remove the barriers” holding back the region’s entrepreneurs.

“The strategy will enable us to turn Europe’s wealth of creativity, research, and ambition into thriving new companies, quality jobs, and real-world impacts,” she said.  

The plan signals a clear intent to boost Europe’s startup landscape. But with global rivals moving fast, much will depend on how quickly and decisively the EU turns ambition into action.

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