Unconvinced VCs See EU's New Startup Strategy as 'Nothing Burger'

The EU has long been working on transforming the continent into an innovation hub on the global stage. Its latest attempt? The ‘Choose Europe’ startup strategy, an ambitious plan intended to stem the exodus of European startups to the US and Asia. Yet, venture capitalists are far from sold on the initiative. The strategy inaugurated on March 28 by the European Commission aims to tackle enduring issues—fragmented regulations, limited access to capital, and a skilled talent gap. However, while its intentions are praised, doubts linger about the capability of the EU to successfully execute this grand plan.

A notable element of the EU’s strategy is the proposed Scaleup Europe Fund. This public-private investment vehicle is designed to inject over €10 billion into late-stage startups, with private contributions expected to far outweigh public contributions. The aim is simple—retain Europe’s promising startups by equipping them with the necessary resources to grow locally. However, even here, venture capitalists like Northzone Partner Michiel Kotting question the sufficiency of the funding, describing it as a ‘drop in the ocean’ when viewed against the considerable scale of the challenge. 

Others remain wary of the bureaucratic delays and compliance-heavy processes that have previously deterred startups and VCs from leveraging public funding. Vasco Pereira da Silva, head of policy at startup advocacy group Allied For Startups, believes that it’s not just about throwing money at the problem. Europe needs significant structural change, not just subsidies. Gilion co-founder Henrik Landgren adds to this cautionary tale, contending that the EU funding process may be so slow that financial stimulation will come too late to the ever-scaling startups. 

Unless the EU begins to operate more like a private investor—conducting swift assessments with minimal strings attached—many fear that the Scaleup Europe Fund could end up as yet another well-intentioned but ultimately failed initiative.