EU proposes scale-up fund to retain promising tech startups

The European Commission has unveiled plans to launch a large-scale investment fund aimed at preventing promising tech startups from relocating outside the EU. The Scaleup Europe Fund, expected to launch in 2026, will target high-growth firms in strategic sectors such as AI, quantum tech, semiconductors, and biotech.

Despite a strong startup ecosystem (with more firms launched annually in Europe than in the US) nearly 30 per cent of European “unicorns” have relocated abroad over the past 15 years, often to the US. A lack of late-stage venture capital is a key factor behind this exodus. US funding, by comparison, pools up to seven times larger.

“The problem is both regulatory and financial”, said Commission vice-president Stéphane Séjourné at the launch of the Choose Europe to Start and Scale strategy. The plan forms part of a wider effort by the EU to retain talent and innovation and aligns with the Choose Europe initiative announced by Commission president Ursula von der Leyen.

“The problem is both regulatory and financial”

The new fund will be co-financed and privately managed and will focus on riskier, larger-scale investments often needed for startups to scale beyond the €50 million threshold. Exact figures have not yet been confirmed, but Innovation commissioner Ekaterina Zaharieva said “it must be big.”

Alongside financing, the Commission is drafting a simplified legal framework, dubbed the “28th regime”, to streamline startup operations across member states. Aimed at cutting red tape and harmonising tax and labour laws, the regime could allow new companies to register within 48 hours.

The Commission will monitor progress and report on implementation by the end of 2027.

^{© BELGA PHOTO JAMES ARTHUR GEKIERE}