Europe’s startup ecosystem has long been hindered by regulatory complexities and fragmented national markets.
Now, some of the continent’s top technology leaders have come together to support an initiative aimed at simplifying and uniting the European tech landscape.
Founders of major European unicorns, including Patrick Collison of Stripe and Taavet Hinrikus of Wise, have endorsed an open letter advocating for the creation of a pan-European entity called EU Inc.
This initiative aims to establish a more cohesive and supportive environment for startups across the EU.
EU Inc: unifying investment processes and simplifying operations
The EU Inc proposal seeks to address the challenges posed by Europe’s fragmented startup ecosystem.
According to the open letter published on the EU Inc initiative’s new website, Europe’s diverse countries and cultures offer unique advantages.
However, varying legal and regulatory frameworks complicate cross-border collaboration.
The founders behind EU Inc argue that European startups are constrained by these regulatory burdens, stifling their potential.
They are calling for the creation of a single pan-European entity to streamline investment processes, simplify operations, and establish a unified stock options framework for employees.
European startups struggle to attract venture capital
Data shows that Europe lags behind the US and China in raising venture capital.
According to Atomico’s 2023 State of European Tech report, European startups secured $45 billion in venture capital funding last year, significantly less than the $120 billion raised by US startups.
Chinese startups also outpaced Europe, raising $48 billion in 2023.
This funding gap highlights the difficulties European tech firms face in scaling up, despite producing a higher volume of new startups than their American counterparts.
EU Inc to provide a 28th legal framework
A key component of the EU Inc initiative is the creation of a 28th legal regime, which would operate alongside existing national laws.
This regime would offer a standardized legal framework for European startups, allowing them to navigate regulatory barriers more easily.
Similar to the European Company Statute, this 28th regime would provide a unified approach to establishing public limited-liability companies across the EU, without replacing national laws.
The push for EU Inc comes amid growing calls for economic reform in Europe.
Mario Draghi, former president of the European Central Bank, recently advocated for an additional €800 billion in annual investment to enhance the EU’s global competitiveness.
His report underscored the need for greater innovation and disruption in Europe’s industrial structure.
The European Commission, under President Ursula von der Leyen, has also emphasized the importance of innovation and smarter regulation as part of its broader agenda for economic growth.
Europe’s tech giants lag behind US and China
Despite its strengths in talent and innovation, Europe has struggled to produce tech giants on the scale of those in the US and China.
American firms like Amazon, Google, and Apple dominate the global tech landscape, while China is home to behemoths such as Alibaba, Tencent, and Baidu.
According to Martin Mignot, partner at Index Ventures, building a European tech giant today requires navigating a complex web of regulations and market conditions.
The creation of EU Inc would simplify this landscape, offering European startups a better chance of achieving global success.
The post European startup founders urge creation of a tech hub to rival Silicon Valley appeared first on Invezz
