European Commission | Remarks by Commissioner Zaharieva on the EU Startup and Scaleup Strategy

Commissioner Ekaterina Zaharieva

Ladies and Gentlemen,

Today, the College has taken an important step to make Europe the best place for innovation.

The best place to start, to scale, to stay.

President von der Leyen made it clear when she presented the new College:

Startups and scaleups are a top priority of this Commission.

We are delivering on that promise.

Our innovators don’t just build companies. They create jobs.

They turn ideas into solutions that improve and save lives.

The good news is that we are not starting from scratch.

We are home to 35,000 early-stage startups.

We don’t lack ideas.

We don’t lack talent.

What we need is a plan to maximise this potential.

The Strategy is following the lifecycle of the company, from starting up to succeeding.

And this is reflected in our 5 areas of action. They are:

1. innovation-friendly regulation;
2. better finance;
3. fast market uptake and expansion;
4. support for the best talent; and
5. access to infrastructure, networks and services.

Let me tell you the more about each of them:

INNOVATION-FRIENDLY REGULATION

Europe is recognized for its strong regulatory standards, providing stability and trust for EU and non-EU investors. In today’s current geopolitical situation this is really important.

At the same time, a European innovator who wants to start a company from zero, struggles with 27 different company rules, taxation regimes, and ways to test his or her idea.

This is why we will introduce a the “28th regime” — for innovative companies.

Digital by default. Borderless by design. It will give startups the option to operate under a single and simple set of rules.

It will explore the possibility of enabling companies to establish in Europe more rapidly, ideally within 48 hours.

The new European Innovation Act and the 28th regime will support startups and growing companies across the EU.

Also, regulatory sandboxes will offer startups safe places to test their ideas in real life. This helps them improve their products and lets regulators understand new innovations better, so they can update rules as needed.

Sandboxes not only help startups but also build trust with authorities, attract investment, and, when used for local projects, can grow communities.

BETTER FINANCE FOR STARTUPS AND SCALEUPS

Capital matters and Europe has it. But we need to connect all this capital to the needs of our innovators.

The European Union public sector has been instrumental in developing the venture capital investments. And we see excellent results in the seed phase.

The European Innovation Council (EIC) has supported deep tech startups with grants and equity investments of up to EUR 30 million.

A clear funding gap persists when it comes to the scaleup financing of high-risk, capital intensive technologies requiring investments above EUR 100 million.

To address key challenges in the functioning of EU capital markets and reduce market fragmentation, the Commission is implementing the Savings and Investment Union (SIU) strategy.

We propose nine important measures. Let me name some of them.

We will team up with private investors to create the Scaleup Europe Fund, part of the EIC Fund. It is a game-changer that will make direct equity investments in AI, quantum, clean tech, and more strategic sectors.

This fund will have public-private structure and will focus on helping deep tech scaleup companies close their funding gaps.

Why are we proposing the Scaleup Europe Fund?

First, financing needs are massive. No existing instruments can address this alone. The European Investment Bank does not have a direct equity instrument. The European Investment Fund and the European Tech Champions Initiative are doing indirect investments. The EIC STEP Scale-Up Call provides equity investments only up to 30 million EUR. This does not allow us to provide strategic direction.

The next MFF is still far. If we don’t act, innovative companies will relocate or be acquired by non-European players.

The Scaleup Europe Fund will gather large amounts of private money and invest directly in important sectors to support Europe’s tech independence and economic safety. Setting up this fund won’t affect the next Multiannual Financial Framework.

Next, we will expand the European Innovation Council and simplify its rules with more ARPA-style processes.

The Commission, in coordination with the EIB Group, will work with large institutional investors to develop a voluntary European Innovation Investment Pact for those who commit to invest part of their assets under management into EU funds-of-funds, venture capital funds and unlisted scaleups.

The Commission will leverage and reinforce existing instruments and develop new instruments to invest in European security and defence startups and scaleups, in line with the White Paper on Defence.

The Commission will create a European Corporate Network to better integrate large companies, corporate venture investors and corporate procurers into the EU’s innovation ecosystem and benefit from innovative solutions developed by startups.

FAST MARKET UPTAKE AND EXPANSION

The successful commercialization of innovative products relies on a mix of risk-tolerant capital, market demand and public support.

We have the biggest market in the world – with 450 million people.

And for any European company it should be more difficult and expensive to look for markets elsewhere.

But in Europe, translating research into commercial success is still difficult. Why?

While universities account for over 10% of patents filed at the European Patent Office, only one-third of these patents are commercially exploited. Additionally, the public procurement process in many EU countries is overly risk-averse, favouring established providers over startups.

In the context of the revision of the EU public procurement directives, the Commission will seek ways to improve and simplify the access to public procurement, taking into account the needs of startups and scaleups.

With the European Innovation Act the Commission will seek ways to increase total investments in public and private innovation procurement across Europe – to provide a fast-track procedure for public procurement of R&D services that fall outside of the EU public procurement directives, including pre-commercial procurements.

The Commission will launch a Lab to Unicorn Initiative to accelerate the commercialization of research results.  Under this initiative, the Commission will support leading European Startup & Scaleup Hubs, rooted in strong university ecosystems, to network and collaborate across borders. We will develop a blueprint for licensing, royalty- and revenue-sharing and equity participation for academic institutions and their inventors when commercializing intellectual property and creating spinoffs. We will provide legal and implementation guidance on the applicable State aid rules.

SUPPORT FOR THE BEST TALENT IN EUROPE

59% of startups in Europe have remotely distributed teams, with 78% of engineering teams working remotely. This trend has helped prevent regional brain drain and enabled startups to access a wider pool of European talent while minimizing operational costs.

However, work in remote cross-border teams is difficult due to the complexity of tax and

social security obligations.

Startups often cannot match the salaries and benefits offered by larger companies, making it difficult to attract top employees. The complexities around Employee Stock Options, such as differences in tax treatment across EU Member States, create additional challenges.

As part of our Choose Europe campaign, we will roll out a Blue Carpet initiative for global talent.

We will facilitate visas to attract top entrepreneurs and skilled workers who want to build a better future with us.

We will also explore the best practices concerning the treatment of employee stock options for

startups, including considering legislative measures to harmonize certain aspects

of their treatment.

We will propose a recommendation to eliminate tax obstacles for remote cross-border

employees for startups and scaleups.

When a company is up and running, with the best talent on board, we will help it grow further by ensuring it can benefit from our world class infrastructure.

Which brings me to the last area –

ACCESS TO INFRASTRUCTURE, NETWORKS AND SERVICES

We will develop a Charter of Access for industrial users to research and technology infrastructures, including for startups and scaleups.

The Commission will financially support access to AI computing facilities for startups.

The European Innovation Act will further promote the access of innovative companies to European research and technology infrastructures through legislative measures.

Colleagues,

This is just the beginning. A promising first step in what must become a long-term, sustained effort to put startups at the heart of Europe’s economy.

This strategy is not just a Commission document.

It is team work.

I want to thank all members of the startup community that have been involved so actively. We were discussing together, drafting together. Among them are Саймън Шефер, Кларк Парсънс, Кат Борлонян, Барт Бекс, Том Вемайер.

I cannot mention all the excellent people that I met during our discussions, forums, hackatons. Big thanks to all those devoted Europeans.

On their behalf my message today is that

Europe is a place where ideas matter. Where talent is valued. Where innovation serves people.

Thank you.

 

Compliments of the European Commission