European Commission Unveils ‘Startup and Scaleup Strategy’ to Support Tech Innovators

Under the first goal, the strategy calls for adopting a “European 28^th regime” to provide a single set of rules across all 27 members of the bloc, including labor and tax laws. The European Commission will also propose a European Innovation Act to promote regulatory sandboxes to allow innovators and entrepreneurs to develop and test new ideas.

The financing component of the strategy includes expanding the European Innovation Council to improve its focus on the challenges innovators face getting funding for high-risk, capital-intensive technologies. It also proposes working with private-sector investors to create a privately managed European Innovation Fund to boost access to venture capital and reduce entrepreneurs’ reliance on banks for financing.

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The third focus area aims to accelerate commercialization of promising innovations by launching a lab-to-unicorn initiative to increase early-stage companies’ access to each other’s services and infrastructure across borders. As part of that initiative, the Commission will develop a blueprint for licensing, royalty- and revenue-sharing and equity participation for academic institutions and their inventors when commercializing IP and creating spinoffs.

The fourth focus includes launching a “blue-carpet initiative” to help attract highly skilled talent, from within the member countries as well as from outside the EU. The European Commission plans to explore best practices involving the treatment of employee stock options across borders and reducing tax obstacles for cross-border remote employees. It will also introduce a new EU visa strategy to better attract students, researchers, and entrepreneurs.

The final piece of the strategy is a plan to develop a Charter of Access to facility access to research and technology infrastructures by companies, including startups and entrepreneurs.

The overall strategy is intended to boost Europe’s technological competitiveness with other territories, including the U.S.

“European startups often encounter two ‘valleys of death,” the strategy document said. “The first occurs when innovations fail to become marketable products, while the second, particularly challenging in Europe, happens when companies struggle to scale. Between 2008 and 2021, nearly 30% of European ‘unicorns’6- relocated outside the EU,7 and only 8% of global scaleups are based in Europe.”

The Commission is particularly concerned with boosting Europe’s competitiveness in “strategic technologies,” which the strategy document lists as artificial intelligence, quantum technologies, advanced semiconductors, medical technology, biotechnology, bioeconomy applications, clean tech and energy, water and blue tech, security, defense, space, robotics and advanced materials.