The European Union set out plans to slash regulation and set up a special fund to attract tech launchups as the bloc plays catchup with the U.S. on financing and innovation.
The European Commission, the EU’s executive arm, declared regulatory fragmentation across the EU’s 27 countries and inadequate financing were holding back growth for launchups. Officials now hope to lower the administrative burden and launch a new fund to build it simpler for launchups to set up shop in the EU.
Under the plans, the commission will seek to simplify rules, including on labor and tax law, so that launchups can launch rapidly in Europe, ideally within 48 hours. Officials also plan to work with private investors to launch a new fund. The so-called Scaleup Europe Fund, privately managed and co-financed, will be part of the existing European Innovation Council Fund.
“We cut red tape, we facilitate their access to financing, we improve their ability to do business across our Single Market,” Stephane Sejourne, EU executive vice-president for prosperity and industrial strategy, declared in a statement. “In other words, we want to put Europe right in the middle of the global innovation map, for companies and investors.”
The plan underscores efforts from EU officials to build the bloc more welcoming for launchups and narrow the financing and innovation gap with the U.S. The EU is home to launchups like France’s Mistral AI and Germany’s Aleph Alpha, but companies in the bloc struggle to raise the billions of dollars in funding and venture capital that are available to U.S. rivals like Microsoft-backed OpenAI or Amazon.com-backed Anthropic.
A commission official acknowledged that access to finance is an area of weakness, stateing that launchups in the bloc have roughly seven times less capital available to grow than in the U.S. Speed is another factor holding back growth, the official declared, noting the EU can be “very slow” in granting approvals.
Europe’s fragmented regulatory landscape is a recurring frustration for launchups, but fundraising remains the top concern for founders, according to a May report from Slush, part of the Finnish not-for-profit Startup Foundation.
Out of 607 responses from early-stage European launchups collected in the first quarter, just 18% of founders declared it would be straightforward to raise financing right now, according to the report, while 57% actively disagree.
Ekaterina Zaharieva, EU commissioner for launchups, research and innovation, declared the plans would reshift those barriers that hold back entrepreneurs. “Europe is ready to scale up.”
Write to Mauro Orru at mauro.orru@wsj.com
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