The new support mechanisms in the EU Startup and Scaleup Strategy Policy

Across the European Union, startups and scaleups face several challenges. One of the most important is access to capital. Getting early-stage funding in Europe has improved, but things get harder as startups grow and late-stage capital is limited. Often, many European entrepreneurs and founders still have to look outside the EU—especially to the U.S. European startups need faster, simpler options—whether from public or private sources. And the diversity of funds must arrive to multiple entrepreneurs, not only to unicorns. Creating new public-private financial framework for start-ups and scale-ups will support European entrepreneurs to growth, key element to foster competitiveness. 

The key problem is that despite in the recent years has surge some venture capital activity, there are several structural limitations remaining in the access to funding.  The EU financial system continues to be largely bank-centric and depending on funding opportunities. It lacks from deep equity markets that fuel startup growth in other regions. Recognising this, the EU Startup and Scaleup Strategy presents a comprehensive suite of tools designed to bridge this gap and create a more vibrant, resilient startup ecosystem. 

The European Innovation Council (EIC) has already emerged in the last few years as a key player of the European startup finance architecture. With a budget of €10.1 billion and a strong track record in supporting deep tech ventures, the EIC blends grants with equity investments to meet the unique financing needs of high-risk innovators. But with the new EU Startup and Scaleup Strategy, the EU is increasing the effort by investing in Start-Ups with the creation of the Scaleup Europe Fund—a new investment vehicle designed to provide strategic, large-scale financing to startups. The SEF will specifically work and fund Scale-Ups in cutting-edge sectors like AI, biotech, and quantum technologies. It will be operated under the EIC Fund; this initiative will complement existing funding tools while ensuring flexibility and private sector participation. 

Another strategic move is the upcoming European Innovation Investment Pact, aimed at mobilising institutional investors, such as pension and insurance funds, to channel more resources into venture capital and scale-up financing. This comes in response to a persistent issue: institutional investors account for only 7% of VC funding in Europe, compared to significantly higher participation in the US. By unlocking this capital, the EU can significantly increase the availability of late-stage funding and reduce the exodus of promising companies to foreign markets. 

But the Strategy is not only about capital. It acknowledges that growth also requires talent, networks, and market connections. Through the Blue Carpet Initiative, the EU is aiming to attract highly skilled professionals from within and beyond Europe, addressing skills shortages and promoting a more diverse startup workforce. The Lab to Unicorn Initiative will support the commercialisation of research outputs and enhance the capacity of universities to turn ideas into ventures. At the same time, the Commission is working to harmonise tax treatment of Employee Stock Options and simplify cross-border remote work rules, making it easier for startups to compete for top talent. 

Public procurement, another critical lever, will be reformed to make it more innovation-friendly and accessible to startups. Proposed revisions to procurement directives will reduce overspecification, encourage risk-tolerant sourcing, and reward novel solutions. Combined with improved access to infrastructure, this creates a more comprehensive support environment for scaling businesses. 

As the EU aligns its financial, regulatory, and human capital policies, the message is clear: startups are no longer a niche interest but a strategic asset. By addressing longstanding structural barriers and unlocking new sources of support, the EU is not just enabling entrepreneurship—it is building a launchpad for its next generation of global tech champions.