Growing European e-businesses: Commission’s measures facing global competition

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Recent European Commission’s initiative includes measures to assist startups, research and innovation companies in view of the EU-wide ambition to close the innovation divide between the Europe and global digital competitors. The initiative is in line with the broader EU ideas to boost competitiveness and profitability, as have been revealed in, e.g. E. Letta report on the future of the Single Market and M. Draghi report on the European competitiveness, and other EU decisions. 

Background
Scaleup companies are fast-growing businesses that have moved past the startup phase, and already achieving an annualized growth rate greater than 20 percent over a three-year period in employees and-or turnover. They feature validated business models, structured internal operations and a minimum threshold of 10 employees. There are the following scaleup firms’ key characteristics:
= Growth rate: it has to exceed 20% annual increase in revenue or staff numbers over three consecutive years.
=Business model: it has to be proved, repeatable and scalable business offering targeted and nation’s broad or international markets.
=Maturity: it has to acquire highly defined employee roles, institutionalized processes and specialized hiring structures compared to early-stage startups.

Reports on the future of the Single Market and European competitiveness
The reports by M. Draghi and E. Letta (both published in 2024) outlined urgent structural overhauls needed “to save” the EU Single Market and close Europe’s economic and technological gaps. Among key reports’ findings, the following aspects shall be specifically mentioned:
= The E. Letta report, titled “Much more than a market: speed, security, solidarity” suggests urgent extending the EU-wide Single Market through “activating such vital economy sectors as, e.g. energy, defense, telecommunications and finance” with the idea of creating “a unified European economic powerhouse”. With a focus on speed, security and solidarity, the report proposes strategic reforms including a new EU-wide “fifth freedom” to enhance research, innovation and education, alongside strengthening financial integration and supporting the SMEs. Hence, Letta stresses the need for collective financial strategies to support the EU’s green and digital transitions, enlargement and economic security goals.
More in: https://transition-pathways.europa.eu/retail/policy/enrico-lettas-report-future-single-market

= The M. Draghi report (entitled “The Future of European Competitiveness”) represents a key milestone in the history and political economy of the European Union, especially through the discussion (in tandem with the Enrico Letta’s report). Draghi report includes two parts: first – “A Competitiveness Strategy for Europe”, and second – “In-Depth Analysis and Recommendations”.
The first part provides the proposed overall argumentation and key elements of the strategy (which has since become widely known as the ‘Draghi Plan’), while the second part provides detailed evidences and analyses of key aspects of the overall arguments.
Generally, the whole report focuses heavily on such main subjects as, i.e. closing the innovation gap with the US and China, lowering high energy costs and scaling up young European digital technology companies.
More in: https://www.tandfonline.com/doi/full/10.1080/00343404.2026.2625764#d1e135

Two other European reports are complementary to those already published:
= The EU Annual Competitiveness Reports (2025–2026). At the heart of the EU’s long-term competitiveness lies the Single Market, home to nearly 450 million people, 23 million companies and a GDP of € 17 trillion. It positions the EU as one of the three largest economies in the world and accounts for about one-sixth of the global economy.
However, persistent barriers in the Single Market, as well as administrative and regulatory burdens hold it back from reaching its full potential. Progress in Single Market integration has slowed, while barriers remain – in particular, for services. Companies, especially SMEs, are facing administrative burden and the need of complying with the government regulation. This makes it harder to do business and reduces opportunities for businesses to scale up. For example, the report shows that two-thirds of businesses view complex regulations as a major barrier, prompting new EU-wide simplification drives.
Source: https://single-market-economy.ec.europa.eu/publications/2025-annual-single-market-and-competitiveness-report_en

= The One Europe, One Market Roadmap (2026): it was adopted by EU institutions in April 2026 as an action plan with a clear delivery deadline of late 2027 to reduce red tape and fragmented national rules, as the EU faces a moment of “profound economic, technological and geopolitical change”. To act swiftly, better withstand external shocks and secure our long-term prosperity, the EU needs a stronger, more integrated economy.
In April 2026, the European Parliament, the Council of the European Union and the European Commission signed a Joint Roadmap to make that happen – with concrete actions and a clear deadline of end 2027. The roadmap is both a political and an operational commitment: it includes close monitoring and regular reporting, to ensure that delivery is transparent and on track.
For example, European digital competitiveness requires modern rules, secure infrastructure and investment in frontier technologies. The roadmap strengthens telecoms, cybersecurity, semiconductors, digital identity and AI, while reinforcing the EU’s position in the AI stack.
Source and citations from: https://commission.europa.eu/topics/competitiveness/one-europe-one-market-roadmap_en

Scaleup Europe Fund
The Commission underlined on numerous occasions that in governance and financing, the focus must be on two main factors: a) providing a requiring substantial late-stage growth capital to fund market expansion rather than initial product research; and b) facilitating the regional support: i.e. the scaleup programs in the EU states can rely on support from the expected and powerful €5 billion Scaleup Europe Fund, providing critical capital and operational guidance for high-potential technology and deep-tech firms.
More in: https://eic.ec.europa.eu/eic-fund_en

The Scaleup Europe Fund’s idea was announced in the Commission State of the Union Address-2025 to ensure that European most promising companies can grow into global leaders. While Europe has strong scientific excellence and a solid startup pipeline, many high-potential firms have had to look abroad for the capital needed to scale.
Hence, the scaleup fund’s idea was aimed at created “a helping hand” to close the existing gaps and keep the value-concept” of the European innovation process. The EU’s investment in the Fund is backed by Horizon Europe, the world’s largest research program.
More on the Fund in: https://eic.ec.europa.eu/eic-fund/scaleup-europe-fund_en

Fund’s advantages
European startups and scaleups already drive innovation and creativity across the member states: i.e. there are already about 35,000 early-stage companies and 3,400 additional tech companies in their growth stage, according to the State of the European Tech-2024 report. They excel in providing innovative solutions to modern challenges, targeting niche or emerging markets and addressing problems often overlooked by larger companies. They are engines of disruptive innovation and create new markets where the EU can assume global leadership. They also stimulate innovation in larger, established companies through collaboration, competition and acquisition.
Thriving startups and scaleups are able to transform the EU member states’ economies by increasing productivity, creating quality jobs, attracting talent and investments. It also plays a key role in the EU-wide integration ambitions to boost productivity and competitiveness, technological sovereignty and innovative growth.
More in: European Commission. The EU Startup and Scaleup Strategy: Choose Europe to start and scale. -21 pp. May 2025. In : https://research-and-innovation.ec.europa.eu/document/download/2f76a0df-b09b-47c2-949c-800c30e4c530_en?filename=ec_rtd_eu-startup-scaleup-strategy-communication.pdf

Commission’s opinion
= “When Europe invests in its innovators, it invests in its future. This is the goal of the Scaleup Europe Fund: from this August, it will ensure that the scale-ups can find what they need right here in Europe to grow into world-leading companies: i.e. to turn European innovation into our competitive edge”.
Ursula von der Leyen, President of the European Commission

= “Present fund’s announcement marks a change in the investment landscape for the European technology companies. With the Scaleup Europe Fund, the member states are able to rely on the EU-wide scientific progress and strong performance in startups, while actively closing the financing gap for the most promising companies to become global leaders and maintaining their base in Europe. The Scaleup Europe Fund also demonstrates what can be achieved in a short time when the EU works hand in hand with leading private investors.
Ekaterina Zaharieva, Commissioner for Startups, Research and Innovation
Citations from: https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1718

To implement these ideas, the Scaleup Europe Fund has been established as part of the European Innovation Council Fund. Besides, the private equity firm EQT has taken up its role as investment manager and is now empowered to take investment decisions independently and on market terms; the EQT was selected through an open and competitive process. The Fund is now able to operate at full capacity, investing directly in Europe’s leading scaleup companies.
On EQT in: https://eqtgroup.com/eqt-foundation

Joining public and private capital
The first investments into the Fund will support scaleup companies across critical technology areas, including artificial intelligence, quantum technologies, biotechnology and clean technologies.
The founding investor group brings together a strong coalition of public and private partners including Novo Holdings, EIFO (the Export and Investment Fund of Denmark), CriteriaCaixa, Santander/Mouro Capital, Fondazione Compagnia di San Paolo together with Intesa Sanpaolo and Fondazione Cariplo, APG Asset Management on behalf of Dutch pension fund ABP, Wallenberg Investments and Allianz, alongside the Commission. Further fundraising will continue with the aim of reaching a target of €5 billion.