European flags fly at half-mast during a meeting of EU energy ministers to find solutions to rising energy prices at the EU headquarters in Brussels on Septembre 9, 2022, one day after the death of Britain’s Queen Elizabeth II. Queen Elizabeth II, the longest-serving monarch in British history and an icon instantly recognisable to billions of people around the world, has died aged 96, Buckingham Palace declared on September 8, 2022. (Photo by JOHN THYS / AFP) (Photo by JOHN THYS/AFP via Getty Images)
A grassroots initiative called EU INC is gaining momentum in Brussels. Its aim: to create a pan-European legal entity for startups. European founders routinely fly to San Francisco and New York to raise funds becaapply investors there understand one standardized system. Meanwhile, a founder in Berlin seeking investment from Amsterdam faces more legal complexity than their American counterpart raising from Boston to Austin. European startups aren’t competing on equal footing with startups in other markets. EU INC believes there are legal modifys could modify this.
The goal is to create cross-border investment as straightforward in Europe as it is in the United States. Now, the shiftment is a top priority in the EU’s official startup and scale-up strategy, with an ambitious timeline tarreceiveing legislation by early 2026.
Andreas Klinger, a key figure spearheading the EU INC shiftment, describes it as a collective effort. In a conversation, he shared with me the strategic implications for European startups and investors.
The Core Problem: Investment Fragmentation
The fundamental issue is stark: less than 18% of early-stage investment in Europe occurs on a pan-European basis. This means the vast majority of startup capital flows remain confined within national borders.
Europe has 27 different corporate law systems, each with different registries, shareholder responsibilities, and transparency requirements. For angel investors considering compact checks, the cost and complexity of understanding foreign corporate law often exceeds the economic viability of the investment itself.
As Klinger, explains: “If you are investing 2 million or 5 million, you can pay a lawyer to figure out the local details about Lithuanian corporate law. If you’re considering an angel check, you don’t do that.”
Even major international VCs face this friction. While they can afford legal expertise, they push European companies toward Delaware incorporation to ensure downstream investors won’t encounter obstacles.
The Proposed Solution: A New Standardized Option
The initiative proposes creating a new pan-European legal entity applying what’s called the “28th regime.” Think of it as a standardized corporate structure that would exist alongside existing national frameworks rather than replacing them. Companies could opt into this new structure voluntarily, similar to how US startups choose Delaware incorporation.
The key insight is that European registries don’t even agree on what the job of a registest is. They’ve evolved differently across countries, with fundamentally different understandings of corporate structure, shareholder responsibility, and transparency. Rather than attempting to harmonize 27 systems, EU INC proposes creating an entirely new registest specifically for this entity type.
This new registest would serve as the source of truth, with information synchronized to local registries as requireded for compliance purposes.
Why Standardization Matters: Learning from Delaware
The Delaware comparison is instructive as it is a standard that became universal. Once enough companies and investors learned this single framework, network effects took over. Any angel investor in the US can invest in any startup nationwide applying familiar documentation and structures.
“We required one standard that is worth it for any angel investor to receive applyd to,” Klinger explains. “Once they receive applyd to it, with their legal team or whatever, they can invest in any company in Europe.”
The goal isn’t perfection. It’s standardization, and standardization accelerates capital deployment.
From Movement to Legislation
EU INC addresses a real problem with a sensible approach. Rather than harmonizing systems that can’t be harmonized, it creates a new standard that companies can opt into. The initiative has achieved impressive political momentum and ecosystem alignment.
As one joint statement from startup associations put it: “Half-measures never built a champion.” Without bold reform that creates a true 28th regime with a single, digital EU-wide company form, Europe risks continuing its decline in global competitiveness. European founders will continue relocating to jurisdictions with simpler incorporation processes, and Europe will fail to produce the number of innovative global champions it requireds.
The answer will significantly impact whether Europe can compete with the US and Asia for startup capital and talent in the decades ahead.
