Beyond catch-up: EIC Board urges systemic reforms to make the EU a leading home for startups and scaleups

Brussels, May 5th 2025

Summary

›EIC Board members pitch a shift from incremental fixes to systemic change across talent, capital, markets and policymaking.
›Short term proposals aim to signal momentum in 2025. Longer term reforms target fragmentation and capital market depth to 2030.
›Ideas include an EU stock option framework, mutual recognition of startup visas, a flexible procurement vehicle and steps toward a workable Capital Markets Union.
›The Board calls for a pilot implementation unit within the EIC and for embedding founders and operators directly in policy delivery.

A push for systemic change at the European Startups and Scaleups Forum

At the European Commission’s European Startups and Scaleups Forum, European Innovation Council Board members Kat Borlongan and Bart Becks argued that the EU must move beyond incremental reforms to a more systemic approach to building a globally competitive startup and scaleup ecosystem. Their input is captured in the Beyond Catch-Up vision paper, which sets out a series of principles, objectives, metrics and flagship initiatives. The document frames a strategy to attract top entrepreneurial talent, mobilise institutional capital, expand market access and redesign public institutions as enablers of growth. It also recommends creating a pilot implementation unit within the EIC and embedding founders and operators in policymaking to speed up delivery. The Commission positions the EIC Board not only as a strategic adviser to the EIC but as a contributor to wider EU innovation policy.

Core convictions guiding the strategy

Movement over measures

The paper argues the EU needs a shift in mindset from checklists of obstacles to building momentum. It calls for an outcome driven approach that aspires to leadership rather than merely closing gaps.

Leapfrog over incremental

Rather than piecemeal initiatives, the Board advocates high impact actions that can be launched quickly alongside longer term structural reforms that outlast political cycles. It prioritises short term moves with strong signalling effects and longer term changes that reshape underlying systems.

Smarter over bigger

Given the EU cannot outspend the US and China, the document promotes active market making that de-risks private investment and creates demand through procurement and regulatory alignment. The EIC and EU instruments should be combined strategically to crowd in private capital and help startups shape rules rather than be surprised by them.

Trust over technocracy

The Board highlights a credibility gap with founders and proposes re-engaging the ecosystem through concrete fixes to the fractured Single Market and startup unfriendly regulation while empowering founders to drive change. It underscores that major reforms will take time but that visible early steps are needed to rebuild trust.

Vision and narrative

The 2030 vision presented is for European tech to shape global markets as a force for societal and environmental benefit. The narrative sets Europe apart by emphasising technology for people and the planet. It argues for more than cutting red tape and calls for bold action within a narrow opportunity window.

Objectives and proposed metrics across four pillars

The Board proposes to track progress across talent, funding, market access and policy quality using a set of directional metrics. Some are unconventional for EU policy and would require careful definition and data sourcing. The intent is to align measurement with outcomes that matter to founders and investors.

Pillar	Objective	Illustrative metrics put forward in the document
Talent	Secure the most advanced talent pool of entrepreneurs, scientists and operators in Europe	Entrepreneurial talent flow between EU and US. Number of researcher spin-offs. Talent migration balance ratio.
Funding	Ensure seamless access to capital throughout the growth journey	Share of EU companies in global investment volume in strategic sectors. Total annual exit value for EU tech companies.
Market	Unlock access to bigger markets faster for EU startups	Global market share of EU companies in strategic sectors. Year over year growth in EU share relative to competitors.
Policy	Transform public institutions into growth partners for startups	Composite ease of doing business for tech startups. Annual startup satisfaction survey on regulation and scaling conditions.

Entrepreneurial talent flow metric:Tracks the number of Series A and later stage companies founded in the EU by US nationals relative to the number founded in the US by EU nationals. The Board positions this as a directional proxy for Europe’s pull on top entrepreneurial talent.

Spin-offs from research institutions:Counts startups created from universities or public research organisations. The Board argues this signals the health of tech transfer and the conversion of scientific excellence into venture formation.

Ease of doing business for tech startups:A composite of time and cost to register, permits, tax treatment for startups and stock options, IP protection speed and regulatory burden at scale. The Board also proposes an annual founder sentiment survey to benchmark progress.

Short term signalling initiatives for 2025

The paper prioritises quick to launch actions that send a strong signal to founders, investors and corporate buyers. The emphasis is on attraction of talent, crowding in institutional capital, expanding procurement demand for startups and modernising policy processes with founder input.

Talent: marketing Europe to global innovators

A US facing campaign to attract engineers and founders is proposed under messages such as Build tomorrow’s world and enjoy today’s life in Europe and In a world of walls, Europe offers open doors for innovators. It would include targeted LinkedIn campaigns highlighting fast track visas, a helpdesk for relocation administration and a job platform for English language roles at EU startups.

Funding: European Scale Initiative and fund-of-funds expansion

Modelled on France’s TIBI and Germany’s WIN programmes, the European Scale Initiative would aim to mobilise pension funds, insurers and asset managers into European venture funds. The paper calls for targeted policy incentives so institutional investors increase allocations. It also supports expanding fund-of-funds capacity to address two gaps. Early deep tech in critical sectors. Late stage rounds through vehicles such as the European Tech Champions Initiative.

Institutional capital constraints in Europe:EU insurers and pension funds are governed by national supervisors and EU level rules such as Solvency II and IORP II. Shifting allocations to venture requires regulatory clarity on risk weighting, liquidity, diversification and fiduciary duty. Member state tax regimes also shape incentives. The document calls for a preliminary analysis of actionable incentives, with a focus on deep tech.

Market: Choose European Tech procurement pledge

A pan European campaign would invite Europe’s largest corporates and public buyers to commit to tripling procurement from European startups by 2030. The proposal includes capacity building, a best practices guide for startup friendly procurement and communications to spotlight successful startup buyer collaborations.

Procurement realities to consider:Public buyers operate under EU procurement directives and must ensure open competition and equal treatment. Any pledge would need guardrails to comply with EU law and the WTO Government Procurement Agreement. Startup friendly practices such as milestone payments, manageable liability and clearer IP terms are feasible within existing frameworks if buyers build capability.

Policy: Startup friendly policy sprints

The Board proposes multi week policy design sprints that pair policymakers with founders to identify specific regulatory friction, prototype solutions and gather real world feedback before drafting. The goal is to shift the EU’s perception from primarily regulating big tech to actively enabling startup growth.

Long term system change proposals for 2026 to 2030

These proposals target structural fragmentation in the Single Market, thin risk capital markets and limited demand pull for innovation. They require cooperation with member states and institutional reforms. The Board distinguishes between top priorities and secondary measures.

Theme	Top priorities	Secondary measures
Talent	An EU wide startup stock option framework under a 28th regime. Mutual recognition of startup visas. A pan European data driven talent strategy updated annually.	Expansion of startup loan guarantees for banks to reduce perceived risk.
Funding	Pragmatic steps toward a Capital Markets Union. Option for a federated CMU to harmonise core elements where full CMU stalls.	Enable secondary markets for startup equity to improve liquidity before IPO or acquisition.
Market and demand	A European Deep Tech OTA style vehicle to fast track innovation procurement. EU wide rules for startup friendly procurement access.	Tax incentives for companies that prioritise purchasing from European startups. Pro Europe standards collaboration in emerging sectors.
Single market and regulatory coherence	A 28th regime to enable a pan European startup entity with fully digital operations. Keep tax and employment harmonisation separate. Mutual recognition of sectoral certifications where security standards are comparable.

European stock option framework under a 28th regime:The proposal is to offer a unified EU framework for employee equity that grants non voting shares taxed at sale, with member states retaining tax rate control. Today stock option rules vary widely and are often unfavourable. An optional EU regime could reduce friction for cross border teams if legally and politically feasible. Taxation remains a national competence which raises complexity.

Mutual recognition of startup visas:Several member states run startup visa schemes. The Board suggests recognition akin to the EU Blue Card so that founders admitted in one country can move and expand across the EU with lighter reapplication. Implementation would require agreement among states and alignment with existing migration acquis.

Pan-European data driven talent strategy:Map skill gaps by sector and role. Use the data to target upskilling, reskilling and selective tech immigration. Integrate ecosystem feedback loops so the strategy updates with market shifts.

Capital Markets Union and a federated alternative:The document backs deeper integration of listing, trading, clearing and settlement to allow startups to raise growth capital seamlessly across borders. It suggests a federated approach if a full CMU continues to stall. Elements include standardised listing rules, unified post trade processes, IPO passporting and limited cross border tax harmonisation. These are politically sensitive and historically slow moving.

Secondary markets for startup shares:Regulated platforms for trading private company shares could improve liquidity for investors and employees pre exit. This requires investor protection, disclosure and alignment with national company law. Europe’s secondary VC market is thinner than in the US which can slow capital recycling.

A European Deep Tech OTA style mechanism:Inspired by the US Other Transaction Authority, the proposal is to create a flexible procurement vehicle that supports innovation friendly contracting. It would include milestone based payments and prototyping. An associated marketplace would connect pre vetted startups with buyers. The paper suggests integrating pre commercial procurement and SBIR style challenge calls and subsidising public buyers to participate.

Single market for startup friendly procurement:Harmonise rules so startups can bid across borders more easily. Provide standard startup friendly terms. The proposal adds tax incentives for firms that prioritise purchasing from European startups though such incentives would require careful state aid and tax coordination.

28th regime for a pan European startup entity:The paper supports an optional EU corporate form not tied to a narrow startup definition. It should enable fully digital incorporation, governance and share allocation. Tax and labour rules would be handled outside the core entity to ease passage. Mutual recognition of sectoral certifications would complement this by cutting recertification costs for cross border expansion where standards are equivalent.

From strategy to delivery

The authors argue that Europe’s problem is not a shortage of ideas but execution. They call for more delivery capacity than a small startup task force can offer. They propose a pilot implementation unit inside the EIC to run short term pushes and small scale trials of instruments such as the innovation OTA mechanism or policy sprints with the EIC portfolio. The EIC’s Trusted Investor Network is cited as a channel to accelerate the European Scale Initiative. Founders and operators would be embedded in implementation teams and a small advisory group would report directly to the responsible Commissioner.

Context and feasibility considerations

Many proposals sit at the intersection of EU and member state competences. Stock options and tax incentives are primarily national. Visa recognition requires interior ministry alignment. CMU elements involve complex financial legislation and supervisory convergence. Procurement reforms must operate within EU directives and international commitments. Mobilising institutional capital requires changes in risk and governance frameworks that vary by country. None of these are impossible but timelines are likely to extend beyond a single work programme and will demand sustained cross DG and cross country coordination.

EIC instruments and role in the ecosystem:The EIC blends grants and equity through the EIC Accelerator and the EIC Fund, supports tech maturation through Pathfinder and Transition, and offers Business Acceleration Services. It has positioned itself as one of Europe’s largest deep tech investors. Delivery on the Board’s proposals would require the EIC to operate beyond funding by convening buyers, institutions and standard setters.

Trusted Investor Network and co investment logic:The EIC’s Trusted Investor Network connects EIC backed companies with vetted investors to crowd in private capital. The Board suggests using this network to kick start the European Scale Initiative so that every euro of public support de risks and mobilises multiple euros of private investment.

Pre Commercial Procurement and SBIR style programmes:PCP allows public buyers to fund R and D prototypes and test phases before full commercial procurement. SBIR style schemes set challenge calls for small firms with phased contracts. Both are used in several EU countries and could be scaled with EU level coordination to create earlier demand for EU startups.

Initiative	What the Board proposes	Key implementation questions
US talent campaign	Marketing, a helpdesk and a hiring platform to attract founders and engineers to EU ecosystems	Which countries will anchor fast track visas. How to ensure follow through on relocation support.
European Scale Initiative	Incentives for pensions, insurers and asset managers to allocate more to European venture funds	What changes are needed under Solvency II and IORP II. How to align national supervisors and tax rules.
Choose European Tech pledge	Triple public and private procurement from European startups by 2030	Legal guardrails under EU procurement law and WTO GPA. How to measure and verify procurement volumes.
Startup friendly policy sprints	Structured multi week co design sprints pairing policymakers and founders	How outputs translate into legislative drafts. How to select representative operators and avoid capture.
EU stock option framework	Optional EU regime with non voting shares taxed at sale	Feasibility under national tax competences. Interaction with existing regimes in France, Estonia and others.
Deep Tech OTA	A flexible innovation procurement mechanism plus a marketplace and challenge calls	Legal basis under EU financial and procurement rules. Buyer capabilities and incentives to use the tool.
28th regime entity	Optional pan EU company form with digital operations	Scope relative to national company law. Ensuring adoption without fragmenting legal certainty.

Bottom line

Beyond Catch-Up reframes EU startup policy around momentum, leapfrogging and market making rather than checklists and incrementalism. It sets measurable objectives and a package of short and long term actions. Delivery will hinge on political will across member states, the Commission’s capacity to coordinate and the credibility it builds with founders through visible early wins.