Brussels is betting big on Europe’s next generation of tech champions. Commission President Ursula von der Leyen announced plans for a €5bn Scaleup Europe Fund designed to keep promising startups from fleeing to deeper pockets abroad. But questions linger over whether the scheme can overcome the EU’s notorious red tape and sluggish capital markets, raising doubts about how quickly the money can reach the companies that need it most.
“The Commission will partner with private investors on a multi-billion euro Scaleup Europe Fund,” Commission President Ursula von der Leyen said in her State of the European Union address. Alongside other initiatives aimed at preventing the flight of startups from the European continent, the program is intended to address Europe’s long-recognised gap in late-stage venture capital, specifically for companies in deep-tech fields such as artificial intelligence, quantum computing, semiconductors, biotech, and defence. The Commission hopes to started operations of the fund in early 2026 and bring in private investors to have a fund size of €5bn.
The scaleup gap
The proposal adresses one of the big pain points of Europe’s competitivness. While the bloc produces more startups annually than the United States, many of its most successful firms end up leaving the continent. According to Commission figures, nearly one-third of European unicorns, or startups valued at more than €1bn, have relocated abroad over the past 15 years, often in search of better access to capital. A key factor is the difficulty of securing venture capital above €50m, which is sometimes seven times more readily available in the US.
Europe does have an existing investment tool, the European Innovation Council (EIC) fund. Its €30m ceiling per company, however, leaves many growth-stage businesses underserved.
To bridge this gap, the Commission plans to launch the Scaleup Europe Fund, “flagship initiative” and part of the broader EU Startup and Scaleup strategy, previously referred to as the TechEU Scaleup Fund, and will be implemented as a new compartment of the EIC fund.
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A multi-billion proposal
The fund will operate on market terms, co-financed by private investors, and independently managed by a private investment fund manager. Potential investors could include pension and insurance funds, which in the US account for around 20 per cent of venture capital investments, but in the EU contributed only 7% between 2013 and 2023. The fund is designed to focus on larger and riskier investments, targeting companies that require capital contribution well beyond the €50m threshold.
Alongside the fund, the Commission also focuses on cutting red tape and simplifying company registration, which should allow for companies to be established within 48 hours. All in all, this should bring in private investors to reach a fund size of up to €5bn. But “the potential is even bigger”, a Commission spokesperson told EU Perspectives. The fund should eventually allow for up to up to €25bn for EU tech companies in future investment rounds.
MEP Eva Maydell (EPP/BLG), who has long championed the idea of a European scaleup fund, welcomed the announcement: “We must support our leading start-ups and our leading innovators through various initiatives, through connecting mechanisms as well as funding, to bring great ideas to market and scale them effectively.”
Practical impact
Suma Capital, a Barcelona-based investment firm backing climate technology ventures, illustrates the potential impact of scale-up support. Last week, the firm announced that it has closed its climate-tech focused fund SC Net Zero Ventures 1 and secured €210m to support scaleups. The European Investment Fund was among the partners contributing capital.
Natalia Ruiz, a partner at Suma Capital, explained: “Through SC Venture, we support climate scale-ups with validated technology and commercial traction, driving their expansion and their long-term environmental and competitive impact.”
Companies part of the European Battery Alliance (BEPA) also underlined that “stronger access to finance for deep tech” is vital for them to compete globally in the battery sector. BEPA added that regulatory adaptation and a common EU startup definition, expected only in 2026, is highly important.
The Association of European Chambers of Commerce and Industry likewise highlighted the fund’s potential to enhance market integration but emphasized that administrative simplification will be critical to its success.
Challenges ahead
However, bureaucratic complexity may still limit the fund’s effectiveness. Especially if companies aligned with strategic EU priorities are favored in the allocation of funding, start ups with a stronger market potential may still miss out. This challenge could be mitigated depending on how the independent management, as put forward by the Commission, will take shape.
Additionally, even with the fund, the growth potential for start-ups in Europe will still be significantly hampered by the absences of a completed Savings and Investments Union — progress on which remains slow-moving in Brussels.
The Commission informed EU Perspectives that is it has already made “considerable progress in discussions with potential anchor investors”, with several commitments already in place. It aims to have the fund operational by early 2026.
