What the new EU Startup and Scaleup Strategy sets out

On 28 May 2025 the European Commission published a comprehensive EU Startup and Scaleup Strategy under the banner Choose Europe to Start and Scale. The strategy bundles policy measures, public financing initiatives and ecosystem interventions intended to reduce fragmentation across the Single Market, accelerate the journey from lab to market and increase the number of high growth technology companies that originate and remain in Europe.

The package is wide ranging and reuses many instruments already under the European Innovation Council and Horizon Europe while adding new large scale financing vehicles. The Commission frames the work as complementary to earlier Choose Europe measures that target talent and research. It will monitor implementation and publish a report by the end of 2027.

Five priority areas and what they mean in practice

The strategy presents actions grouped into five main areas. Below each area is listed with the concrete measures announced or signposted and a short critical note about limits and open questions.

1. Fostering an innovation friendly regulatory environment

The Commission promises simplification across the Single Market, lower administrative burdens and legal changes to reduce the cost of failure. A proposed European 28th regime is cited as a way to harmonise rules in areas including insolvency, labour and tax law. A European Innovation Act and regulatory sandboxes are planned to help startups test and scale novel offers under temporary rules.

Critical note. Harmonising insolvency, labour and tax rules across 27 member states is politically and technically difficult. A single European 28th regime is an ambitious idea but the press material leaves important design questions open, including how subsidiarity will be respected and how firms will opt in, and whether this would create regulatory arbitrage.

2. Better finance for scaleups

Big-ticket elements in the package are an expanded European Innovation Council, a dedicated Scaleup Europe Fund and measures to mobilise institutional investors through a voluntary European Innovation Investment Pact. The strategy also references the Savings and Investment Union as a structural channel to increase domestic long term financing into venture.

Potential founding investors named in Commission communications include major public and private players such as Novo Holdings, EIFO, CriteriaCaixa, Santander/Mouro Capital, and other banks, pension and foundation investors. The fund aims to keep high potential companies in Europe by providing late stage capital.

Critical note. Public late stage funds can help de-risk rounds but matching the pace and structuring of private growth investors is hard. Public mandates also require governance, exit planning and alignment with private co-investors. Mobilising large institutional investors to accept venture risk is a long term project not solved by statements alone.

3. Market uptake and scale support

The strategy targets the lab to market gap with a Lab to Unicorn initiative and European Startup and Scaleup Hubs that connect university ecosystems. The initiative will include guidance on licensing, royalty and equity participation for academic institutions when commercialising IP and creating spinoffs. The Commission also flags state aid guidance for IP arrangements.

Critical note. University tech transfer has long been inconsistent across Europe and creating an EU level blueprint will help only if underpinned by resourcing and incentives at national and institutional levels. Equity participation models can create conflicts over ownership and incentives that need careful legal design.

4. Growth and talent policies

Measures to attract and retain skills include a Blue Carpet initiative focusing on entrepreneurial education, employee stock option taxation, and cross border employment rules. The Commission will also promote the Blue Card Directive and encourage member states to introduce fast track visas for non EU founders.

Critical note. Talent mobility depends on living conditions, housing, immigration rules, and predictable tax treatment for equity. Fast track visas matter but without complementary measures in taxation and social security, their effect is limited.

5. Infrastructure, access and commercialization

To shorten time to market the strategy promises easier access to research and technology infrastructures and a Charter of Access for industrial users to harmonise contractual terms. The intention is to make labs, testbeds and industrial facilities more available to startups for pilot and scale trials.

Critical note. Harmonising access conditions across diverse research infrastructures will need sustained funding and capacity building. Intellectual property, confidentiality and cost recovery are hard commercial issues in these arrangements.

How the EIC is being changed and expanded

The Commission says the European Innovation Council will be simplified and expanded to provide better funding opportunities. The plan signals more ARPA-like processes and a broader remit for the EIC, with closer links between grants, equity investments and business acceleration services.

The EIC structure and instruments remain central. The EISMEA executive agency implements the EIC and runs Business Acceleration Services. The EIC Fund acts as the venture capital arm making equity investments often alongside private co-investors through the Trusted Investor Network.

EIC Fund, Trusted Investor Network and mobilisation of capital

The EIC Fund is presented as a strategic investor with an impact mandate to crowd in private capital. The Trusted Investor Network brings together institutional investors, VCs and corporate venture arms willing to co-invest alongside the EIC Fund. The network reported 111 investors with more than €300 billion assets under management in the lists shared by the EIC.

Critical note. The EIC Fund’s past performance metrics are mixed and headline leverage ratios do not directly translate to sustained ecosystems. Co-investment depends on deal quality, exit prospects and return expectations. Public money can provide signal and anchor capital but cannot substitute for a healthy and diverse private venture ecosystem.

STEP Scale Up detailed mechanics and eligibility

The STEP Scale Up scheme under the Strategic Technologies for Europe Platform is an explicit attempt to channel larger equity investments into strategic technologies such as semiconductors, quantum, AI, robotics, energy and biotech. The civilian STEP 2026 budget was indicated as €300 million and the Defence variant at €100 million for 2026.

This design is explicitly intended to ensure private investor appetite before public equity is deployed. Candidates that meet evaluation thresholds but are not selected are awarded a STEP Seal granting Business Acceleration Services and signalling readiness to private investors.

Scaleup Europe Fund specifics and process

The Scaleup Europe Fund is designed as a large, professionally managed late stage growth vehicle, distinct from the EIC Fund’s existing structure in that it will be fully privately owned and operate with a market based manager selected through an open call. The EIC Fund Board launched a call for expressions of interest to recruit the fund manager in December 2025 and set timelines for pre qualification and selection with a target launch in spring 2026, subject to contractual steps.

Critical note. Reputation and scale of anchor investors matters but political and commercial risk appetite will shape mandates. The fund’s governance, public investor influence and exit expectations will be decisive for its success. The selection of a manager through a private market procedure leaves several strategic choices to commercial advisers rather than directly to democratic scrutiny.

Other EIC instruments retained and scaled

The EIC’s suite of instruments remains active. Key elements include: Pathfinder for high risk research, Transition grants to mature technologies, Accelerator for scaling companies with grant and equity options, Pre Accelerator targeting widening countries, Business Acceleration Services that deliver coaching, market and procurement connections and Advanced Innovation Challenges pilot for demand driven applied deep tech.

Critical note. BAS is an effective non financial support tool, but its impact scales unevenly. Strategic follow up, resourcing and local ecosystem readiness will determine whether services convert into longer term survival and growth.

Inclusion and widening participation measures

The EIC Pre Accelerator and other widening programmes aim to raise investor and business readiness in less mature innovation ecosystems. The Pre Accelerator allocates lump sums to early stage deep tech SMEs established in widening countries with free access to BAS and a fast track to the EIC Accelerator. The 2027 Pre Accelerator call envisages grants between €500 thousand and €1 million and a €20 million to €40 million total envelope depending on the year quoted in materials.

Critical note. Targeted funds for widening countries help reduce geographic inequality but capacity building at universities, local investors and corporates is required. Single grants alone do not create regional venture markets.

Advanced Innovation Challenges pilot

The Advanced Innovation Challenges pilot is a two stage, demand led instrument to accelerate high risk solutions where research has not yet translated into commercial uptake. The first stage offers fixed lump sum project grants of about €300 thousand and the second stage up to €2.5 million lump sums for scale trials and user integration. The first challenges in 2026 targeted Physical AI in robotics and New Approach Methodologies in biomedicine.

Metrics, reporting and political framing

The Commission will track progress with global key performance indicators including the number of startups, scaleups, valuation milestones defined as centaurs (companies valued over €100 million) and unicorns (valued over €1 billion). The Commission plans a public implementation report by the end of 2027 to compare EU performance with global competitors.

What the EIC and EISMEA publicly report about recent impact

The EIC publishes impact reporting and data hub summaries to justify policy directions. Recent figures released in EIC materials and impact reports cited the following highlights for the EIC portfolio and EIC Fund activities up to 2025 2026 timeframes.

Caveat. The EIC reports use different aggregate periods and definitions across pages. Readers should treat headline leverage and valuation counts as directional rather than definitive and seek the Data Hub and audited financial statements for granular verification.

Governance, accountability and operational actors

The executive agency EISMEA runs the EIC implementation and Business Acceleration Services. The EIC Fund is managed under private law with the Commission as a shareholder. Key governance bodies include the EIC Fund Board of Directors, an Advisory Committee, the EIC Board that advises strategy and appointed Programme Managers who manage thematic portfolios.

Public communications list a wide set of named actors including EIC Board members and Programme Managers. The Scaleup Europe Fund manager will be selected through a private market procedure and will have substantial influence on portfolio selection and strategy.

Key dates and application mechanics to watch

Open questions and where claims need testing

The strategy is extensive in scope but leaves several delivery and evaluation questions open. Key issues to monitor include the real scale and speed of private capital mobilisation, the effectiveness of the proposed 28th regime for regulatory harmonisation, the governance of the new Scaleup Europe Fund and its ability to avoid crowding out private managers, the practical roll out of regulatory sandboxes, and the visibility of conditionality in investment decisions to preserve European value capture.

Valuation based KPIs are vulnerable to market cycles. A focus only on unicorn counts can incentivise growth at any cost rather than sustainable, mission oriented industrial leadership. The strategy needs transparent metrics on jobs, R and D intensity, patenting and domestic production to complement valuation measures.

What this means for founders, investors and policymakers

For founders the strategy signals more avenues for funding, coaching and market access especially for deep tech firms that require patient capital. Applicants should note new investor pre commitment requirements for STEP calls and the importance of the EIC BAS for market and procurement matchmaking.

For professional investors the Commission is actively seeking to mobilise institutional capital and to create larger late stage vehicles. Private managers will need to assess how public participation affects deal terms and exit mechanics and whether co investment alignment is straightforward in practice.

For policymakers at national level the strategy is both an opportunity and a challenge. It offers resources for talent, hubs and widening participation but requires domestic reform in tax, insolvency, IP policy and education to fully benefit from the initiatives.

How to engage and next steps for applicants

Interested fund managers, investors and companies should consult the EIC and EISMEA web pages for application details. The Scaleup Europe Fund manager call has specific timelines. STEP applicants must prepare a full business plan and secure investor pre commitments covering at least 20 percent of the target round.

Final assessment

The EU Startup and Scaleup Strategy is an ambitious attempt to knit financing, regulatory reform, talent and infrastructure into a coherent push to keep more high potential tech companies in Europe. It builds on the EIC’s existing tool kit and pushes the EIC Fund and new late stage vehicles to play a larger role. However turning policy intent and anchor public commitments into sustained private capital flows, consistent national reforms and durable global scaleups is a longer term project.

The strategy’s success will rest on implementation detail, speed of private capital mobilisation, the quality of fund governance and whether national and regional actors align their rules and incentives with the new EU level offers. The Commission’s 2027 progress report will offer a first public test of whether the strategy moves the needle beyond announcements.