EU Commission: Strategy to promote start-ups and scale-ups

Start-ups and scale-ups are among the most promising drivers of the EU economy, driving innovation, creating highly skilled jobs, attracting investment, and promoting sustainable growth. Nevertheless, serious challenges remain: many young companies fail to get their ideas off the drawing board or out of the lab and onto the market, or encounter obstacles to expansion in the EU single market, such as complex regulations, fragmented rules, or a lack of financing options.

The EU Start-up and Scale-up Strategy, presented on May 28, 2025, addresses these weaknesses. Stéphane Séjourné, Executive Vice President for Prosperity and Industrial Strategy, said: “Companies that are founded in Europe must grow in Europe.” With this goal in mind, the EU wants to create an economic structure that supports start-ups and scale-ups at every stage of their life cycle – from start-up to expansion – through key reforms, better financing options, and less bureaucracy.

Start-ups vs. scale-ups

Start-ups are young, innovative companies that are often founded with limited resources but have the potential to grow rapidly through technological or business model innovations. Scale-ups, on the other hand, represent the next stage of development: they have successfully completed the initial phase and have the capacity and market readiness to achieve significant growth, both in terms of revenue and employee numbers.

Scale-ups are considered crucial for creating new markets, promoting technological sovereignty, and ensuring Europe's global competitiveness. However, scale-ups in particular often encounter financing bottlenecks in the area of investments above 100 million euros and struggle with regulatory barriers that make international expansion difficult. In order to keep these companies in the internal market and support them on the threshold of a global breakthrough, targeted measures are needed that go far beyond the support provided to traditional start-ups.

EU Commission strategy:

In order to relieve this important growth engine, which is “powered” by start-ups and scale-ups in the EU, the EU Commission's strategy focuses on a total of five pillars, which will be supported by a variety of measures to be implemented from Q3 2025 to 2027:

1. Promoting an innovation-friendly environment: A key measure here is the so-called “28th regime”. These voluntary, uniform legal framework conditions for start-ups and scale-ups are intended to make it much easier to set up and operate companies in the EU. Company, tax, and insolvency law will be harmonized and made fully available online so that administrative and start-up processes can be completed within 48 hours. The aim is to overcome legal fragmentation in the single market and significantly reduce the costs of entrepreneurship, especially in the event of failure.
2. Better financing options: Financing options are to be better tailored to the needs of fast-growing companies. To this end, the Scale-up Europe Fund is being set up to promote large financing rounds of €100 million or more, a segment that is currently considered underserved. The focus is on strategic technologies such as artificial intelligence, biotechnology, and sustainable energy. The existing Fund for Disruptive Technologies (European Innovation Council) will be expanded and simplified to enable a faster response to the needs of innovators. In addition, institutional investors such as pension and insurance funds will be mobilized through targeted incentives to invest a larger share of their portfolios in venture capital funds and scale-ups.
3. Faster market access and expansion: The focus here is primarily on the “Lab-to-Unicorn Initiative”. This measure aims to strengthen the networking of university innovation centers in order to promote the commercialization of research results and the establishment of spin-offs. It includes concepts for licensing fees, revenue sharing, and the participation of researchers in companies. In addition, there are plans for a procurement law reform for public tenders, which will make it easier for start-ups to access them. The European Corporate Network will also enable start-ups and scale-ups to network with established European companies in order to win new customers, expand their business opportunities, and benefit from existing supply chains.
4. Attracting and retaining top talent: Part of this pillar is the Blue Carpet Initiative, which aims to facilitate access to highly skilled professionals from third countries through faster visa and work permit procedures, especially for innovative founders. At the same time, tax and bureaucratic barriers to cross-border remote workplaces are to be reduced.
5. Infrastructure measures: These include an EU-wide digital access platform that connects start-ups, SMEs (small and medium-sized enterprises) and scale-ups with research centers, technologies, and consulting services. It serves as a one-stop shop for all important information and resources. At the same time, an access charter for industrial users will be introduced, which will create a level playing field for start-ups by harmonizing access conditions to public and private research infrastructures and facilitating the use of important resources.

Expectations for the strategy

With its EU Start-up and Scale-up Strategy, the European Commission has set an ambitious goal: to make Europe a global leader in innovation and entrepreneurship. The planned measures are comprehensive and address key issues such as complex regulations, lack of market access, and challenges in obtaining financing.

In practice, the strategy aims to make it significantly more attractive to start and expand technology companies in the EU. In particular, the 28th regime, as the planned optional legal framework of the EU, could ensure uniform conditions and simplify the process of setting up a business. Improved financing options, such as the Scale-up Europe Fund, are intended to prevent promising scale-ups from moving abroad.

Economic actors also expect positive impetus from the harmonized procurement procedures and the Lab-to-Unicorn initiative, which integrates universities more closely into the start-up ecosystem. At the same time, there are high hopes for the harmonization of tax and legal aspects of cross-border work and employee participation.

However, challenges remain: Member states must implement the measures at national level, and fragmented capital markets within the EU continue to pose structural hurdles. However, it is also clear that the EU's approaches to reducing bureaucracy, making framework conditions more flexible, and facilitating financing options are a step in the right direction to make Europe competitive and attractive for start-ups and scale-ups.