Invest Europe Statement on EC Startup and Scaleup Strategy

An ambitious step forward for Europe's innovation ecosystem.

On May 28th, the European Commission launched the Startup and Scaleup Strategy, setting out a bold ambition over the next few years: to make Europe the best place in the world to build, grow, and keep global innovative companies.

The Strategy sets out a wide range of actions to cut red tape, improve access to finance, accelerate market expansion, attract talent, and unlock infrastructure and networks.

Legal reforms must support growth, not constrain it

Invest Europe has long advocated for a more integrated legal environment that empowers Europe’s most innovative companies to scale, and welcomes the Commission’s focus on updating the legal and regulatory environment for startups and scaleups – including not least plans for a 28th regime and revisions of state aid criteria. These are not just technical updates – they are strategic levers to help Europe’s most innovative companies grow. As investors in Startups and scaleups we know that they power jobs, innovation, and long-term competitiveness. The rules around how they are created, funded, and scaled must reflect that reality.

As Europe wants more startups and scaleups, we need frameworks that support them from day one through every stage of growth. If not, we risk reinforcing – rather than resolving – Europe’s scale-up gap. This means fixing the structural barriers that still hold them back – especially those that make equity financing less attractive or disincentivize scale.

When definitions do not match reality, like the EU’s current SME definition, we risk excluding PE/VC- backed businesses – usually highly productive, highly innovative companies – from considerations on proportionality when applying rules and funding, this because of outdated ideas about ownership and control. As the Commission introduces new definitions for startups, scaleups, and innovative companies, it must avoid repeating and expanding those mistakes to the initiatives included in the Startup and Scaleup Strategy. A Strategy that punishes growth or blocks companies from support just because they have taken on equity is a strategy that holds Europe back.

Notably, the Strategy recognizes the strong performance of European venture capital – citing Invest Europe data showing that VC returns are now on par with or surpassing non-EU counterparts. This is a clear validation of the role private capital plays in Europe’s innovation ecosystem, helping companies scale – not stall.

Public funding as a lever to enable scale and crowd in private capital

Invest Europe supports continued EU engagement in startup and scaleup finance. But as the ecosystem matures and competition intensifies, public funding must become more agile, targeted, and smarter – addressing market failures, where needed, while mobilizing private capital.

That starts with simplifying EU funding processes that remain overly complex, especially for smaller fund managers. Rules and procedures need to reflect how private funds operate in practice and allow for more agile deployment of capital.

This also means tying the start-up and scale-up strategy to the later stages of company growth – where Europe’s scale-up gap is still real – while doing more to attract private investors. A more inclusive approach to capital mobilization throughout the whole lifecycle of European companies will be key to strengthening Europe’s innovation base.

Public funding should be a catalyst, not a competitor to private capital. If done right, it can help de- risk innovation, crowd in capital, and deliver real value for startups, scaleups, and the broader economy. As the European private capital ecosystem grows, so should the ambition and efficiency of its public investment tools.