Brussels’ long-promised push to keep Europe’s most promising tech companies at home is entering a decisive phase. The Commission will appoint a manager for the €5bn Scaleup Europe Fund by the end of February, with the first investments expected by summer at the latest.
The fund is both a tool to support individual companies and an attempt to reshape Europe’s investment ecosystem. It should prevent high-growth firms from relocating abroad and demonstrate that backing European deep tech can be profitable business.
“We want to keep companies in Europe, help them become global champions, and show that it makes economic sense to invest in the European deep-tech sector,” Commissioner Ekaterina Zaharieva (Startups, Research and Innovation) said during last week’s World Economic Forum in Davos. said. “This fund should have a much broader effect than just the companies we invest in.”
The Commission started working on the fund in May 2025, and Commission President Ursula von der Leyen first announced the initiative during her State of the European Union address in September 2025. “Because we want the best of Europe to choose Europe,” Ms. Von der Leyen said last year.
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Alongside the European Investment Bank and a group of private investors, the Commission officially unveiled the Scaleup Europe Fund last October.
The fund is designed to address one of Europe’s most persistent competitiveness gaps: the shortage of large, late-stage growth capital that pushes successful start-ups to seek funding outside of Europe.
Filling the late-stage gap
While Europe produces a growing number of start-ups, many struggle once they reach the scale-up phase. According to Commission data, nearly a third of European unicorns — privately held, venture-capital-backed startups headquartered in Europe that have achieved a valuation of $1bn or more — have moved abroad over the past 15 years, often after failing to secure funding rounds above €50m. In the US, unicorns are far more common, supported by deeper capital markets and a larger pool of long-term investors.
The Commission hopes the Scaleup Europe Fund can help close this gap, and keep talent at home. “We are the best educated people in the world,” Ms Zaharieva said.
The EU will contribute €1bn, while the remaining capital is expected to come from private investors.The target fund size is €5bn, with a first close of around €2.5bn to €3bn expected by the spring. Ms Zaharieva has also floated a longer-term ambition of scaling the fund up to €20bn, though she did not tie that to a specific timeline.
Private capital steps in
Ten investors have already committed capital, Ms Zaharieva said, including Novo Holdings, which manages the assets of the Novo Nordisk Foundation. Its chief executive, Kasim Kutay, said the firm will invest €500m over the fund’s 10-year lifespan.
“We haven’t even started an aggressive fundraising yet, and we’re already close to €3bn,” Kutay said at Davos. “This is a terrific start.”
However, the fund’s target size remains modest when set against the scale of global late-stage venture capital markets. According to European Commission figures, later-stage venture capital investment in the EU amounted to around $21bn in 2024, compared with roughly $133bn in the United States — an 84 per cent gap at the growth and scale-up stage.
Industry welcomes fund
Industry representatives welcomed the initiative, though underlining that its success will depend on execution. Robert Lugowski, CEO of clinical data platform Clininote, said the “key question is how long real change will take — speed of execution remains one of Europe’s core weaknesses.”
Clark Parsons, managing director of the Innovate Europe Foundation and CEO of the European Startup Network, added: “Let’s hope enough European institutional investors now step up and do their part; this fund should serve as a spark for much more private investment.”
Money in, money out
Despite its public backing, the fund is explicitly not conceived as a subsidy scheme. The Commission hopes that by crowding in private capital — particularly from pension funds, insurers and long-term institutional investors — it can help normalise large late-stage investments in European technology.
For now, some investors remain cautious. In the EU, pension and insurance funds accounted for just a small fraction of venture capital investment over the past decade, compared with roughly one-fifth in the US. Regulatory constraints, limited risk appetite and underdeveloped securitisation markets all play a role.
“If we don’t address these issues, I fear that the kind of patient, long-term risk capital we see in the US will never really take off in Europe,” Kutay warned.
Choosing the manager
The next key step is appointing the fund’s manager, a decision expected by the end of February. The European Innovation Council Fund has taken charge of the process and is actively seeking a privately owned, market-driven manager with the dual mandate of advising on investments and managing the portfolio.
Ms Zaharieva said the team scrapped early plans to appoint multiple managers after investors clearly expressed a preference for a single operator, though the team might reconsider this approach if the fund grows substantially. She stressed that the fund must demonstrate transparency and independence to earn investor confidence.
