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Scaleup Europe Fund: €1B of €5B Disclosed, Now What? | E785 · Startup & Tech News from Germany, Austria, and Switzerland by Startuprad.io™

0:00
Europe has a scale-up fund with a €5 billion
0:04
target. The European Commission has put in €1
0:07
billion, and that is the only commitment we could find
0:11
disclosed by name. Europe has a new company for
0:14
startups. It is still a proposal, and the European Parliament
0:18
has not yet voted on it. Europe has a new
0:22
rulebook for public buyers. The target for finishing the
0:25
negotiations is end
0:31
Europe is adding growth capital faster than it is removing
0:35
the barriers to scaling. The question for
0:38
2031 is whether its best companies
0:42
can grow globally without having to move their strategic
0:46
center out of Europe.
0:58
This is Startuprad.io, your startup podcast and YouTube
1:01
channel on startups and venture capital in Europe with focus on
1:05
Germany, Austria, and Switzerland. Hello and welcome everybody, my name
1:09
is Joe. I am coming to you from Frankfurt am Main, Germany, and
1:13
this is part number 8 of our series, The European
1:16
Scale-Up Question or The European Scale-Up Gap. For
1:20
7 episodes, we diagnosed the problem Today we
1:24
ask what would actually have to change between, say,
1:28
2027— we're very close to it— and 2031 for
1:31
Europe to produce more globally scaled technology companies.
1:35
And we write down how we will check.
1:39
It's 2 years after the Draghi report. The Joint European
1:43
Disruptive Initiative tracked the follow-through. According to
1:46
its Draghi Tracker, about a quarter the recommendations
1:51
have been implemented. Europe does measure its startup
1:54
conditions. The European Commission publishes a Startup and
1:57
Scale-Up Scoreboard with 36
2:01
indicators comparing member states. What nobody
2:04
tracks in public is the outcome for the same companies
2:08
over time— which ones scaled, which ones moved,
2:12
and which ones failed. This is the gap.
2:16
This episode tries to fill. So today I
2:19
separate 3 things: policy announcement— what
2:23
governments and institutions say they will do—
2:26
infrastructure changes— what actually alters the
2:30
conditions under which companies scale—
2:33
and observable outcomes— what founders, investors, and
2:37
customers then do differently. Most of the
2:41
debate is about the first This episode is more about the
2:45
third. So here's my thesis in one breath:
2:50
Europe is adding growth capital faster than it's removing
2:54
some of the barriers to scale. This
2:57
creates a risk— companies may still need to
3:01
relocate to grow. Our scorecard will
3:04
test whether they can scale globally
3:08
while keeping their strategic center in Europe, and it will
3:12
reward the cases that prove us wrong. I
3:15
call the timing mismatch the sequencing gap. A new
3:19
program is an input. A company scaling differently
3:23
is an outcome. This episode rates Europe on outcomes.
3:28
Where we are in the argument: Part 1 defines the scale-up gap
3:32
in our overall series. I mean, Part 2 called
3:35
fragmentation a hidden growth tax. Part 3 of our
3:40
scale-up series showed a capital architecture
3:43
breaks between the rounds. Part 4
3:47
was demand that does not turn into deployment.
3:51
Part 5 was talent that does not
3:55
recycle. Part 6 introduced capital
3:58
gravity, and Part 7 showed that Europe's
4:01
strongest hubs do not add up to one market.
4:06
In Parts 6 and 7, we We put a forecast on record.
4:10
The EU Inc. will not apply before January 1st,
4:15
2028, at 75% confidence. That
4:18
forecast stays still on record and we'll score it on
4:22
that date. Well, maybe a few days later because,
4:26
you know, New Year's. Anyway, today I add a second
4:30
stricter one. Defining scale
4:33
infrastructure. First, a definition, because we will use
4:37
this from now on. Scale infrastructure
4:42
is the set of financial, commercial, institutional,
4:46
and human systems that lets a company grow from
4:49
product-market fit into global leader without rebuilding
4:53
its operating environment every time it grows.
4:57
Startup Radio's way to measure it is the the
5:00
Scale Infrastructure Scorecard. It has
5:05
5 tests, and each test asks about companies'
5:08
behavior, not government announcements.
5:13
Number 1, capital. Can a company raise its
5:16
next growth round without having to
5:20
move its parent company? The market. Can they
5:23
expand into another European country
5:27
as a domestic decision. Demand—
5:31
can it win repeat European customers,
5:36
not just pilots? People—
5:40
do its operators come back as founders and
5:43
angels? Retention— as it grows,
5:48
do its parent company, its leadership, and its listing
5:52
stay in Europe? And here is how we keep
5:56
it honest. We do not pick like the best 50
5:59
companies in 2031. That would,
6:04
uh, kind of select the answer. We fix the group now.
6:08
Our cohort is every company headquartered in Europe that
6:11
announced funding of €100 million or more
6:15
in calendar year 2026. We freeze that list
6:19
at the end of January 2027. And publish it. Every
6:23
company stays in the cohort, including the ones that
6:27
fail, get acquired, or relocate. Each year
6:31
we score every company on the 5 tests and we
6:35
publish results, including the cases that contradict
6:38
us. Before I make my case,
6:42
the strongest opposing argument, it goes something like this:
6:46
capital buys time. Europe's reforms are slow, so the
6:50
best thing a growth fund can do is keep good companies
6:54
funded until the rules catch up.
6:57
And international investors are not a threat. A strategic
7:01
investor can bring customers and supply chain. An American
7:05
fund can bring expertise and access to the largest market in the world.
7:09
A company can take that money, list in New York, hire
7:13
commercial team in California, and still be a European
7:16
company in every way that matters— research,
7:20
engineering, leadership, tax. I think that argument
7:24
is largely right, and I want to say so clearly.
7:28
Foreign capital can help European companies
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become global leaders. So the risk I'm
7:36
casting is narrower. The failure is not
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foreign money, as I said before. The failure is a
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company having to relocate its strategic center in
7:47
order to get the money, the customers, or the listing it needs.
7:51
The European Central Bank names that risk. It says
7:55
foreign investors often provide the additional funding European
7:59
scale-ups need and that they may increase the
8:02
likelihood of headquarters relocating. May
8:06
is the important word. Whether it happens is exactly
8:10
what our scorecard measures. Test number 1,
8:14
capital. Can Europe finance its winners?
8:18
What happened? The Scale-Up Europe Fund targets about €5
8:22
billion. The European Commission committed €1 billion.
8:26
EQT manages it. It invests in rounds of
8:30
€100 million and above. In August, it
8:33
co-led ICEYE's €1 billion financing round,
8:38
which includes €450 million of
8:41
primary Series F capital and a valuation
8:45
above €10 billion. In September, Samsung
8:49
Electronics and the Scale-Up Fund Europe co-led Mistral
8:52
AI's €3 billion Series D.
8:57
On the 10th of July, the EIB Group announced the
9:00
European Tech Champion Initiative 2.0. With a
9:04
fundraising target of up to €15
9:08
billion. And on the 22nd of September, the
9:12
Commission and the EIB launched an Institutional Investor
9:15
Pact with 13 institutions saying they intend
9:19
to invest in Germany. KfW reported that
9:23
€2.64 billion had been invested under the
9:27
WIN initiative at the end of 2025 against a goal
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of €12 billion by 2030. KfW counts
9:34
investment through funds, funds of funds, direct investments,
9:38
and debt such as venture debt. There is
9:42
no published year-by-year schedule, so that figure tells us
9:46
progress, not whether the WIN initiative is on
9:50
pace. Why it matters structurally.
9:53
There are 3 different numbers in every headline about the European Growth
9:57
Capital: a target, is what a program aims
10:01
for. A commitment is money promised, and
10:04
deployment is money in a company. On the
10:08
Scale-Up Europe fund, we searched on November 3rd the
10:12
EIC fund page, EQT's announcement, the EIB,
10:16
the track price. We found no published total of
10:19
commitments beyond the Commission's €1 billion.
10:24
That is a disclosure gap. It is not proof that the money is
10:28
missing, but a public fund should publish its closing
10:31
figure, and we will report if it ever does so.
10:36
The capital test is one question: can a European company raise
10:39
its next growth round at €100 million plus
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without investors requiring it to move its parent
10:47
company out of Europe? Not one big round— round
10:50
after round until the answer My answer is routinely yes.
10:55
Europe has growth funds, but it does not yet have
10:59
capital continuity. What would change my mind?
11:03
If, say, by 2028, most cohort companies
11:07
that raise again do so with a European lead or
11:10
co-lead and without changing their parent company,
11:14
the capital test is passing. Whether the headline
11:19
Fund sizes say. If instead
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redomiciliation clauses— so moving headquarters
11:27
clauses— start appearing in term sheets as a condition of the next
11:30
round, the risk is real. What I will
11:34
measure for every company in 2026 cohort,
11:38
each later round, who led it and whether
11:42
the parent company stays where it is. Test
11:46
number 2, market. Can Europe behave like a home
11:49
market? What happened? On the
11:53
18th of March 2026, the Commission
11:56
proposed EU Inc., the so-called
12:00
28th regime, as a regulation.
12:04
Online registration within 48 hours
12:07
at a maximum cost of €100, with no minimum capital
12:12
and a European employee stock option rule that defers
12:15
taxes until shares are sold. It does
12:19
not include a pan-European corporate tax regime.
12:23
On the 23rd of October, the member states agreed to the
12:26
Council's negotiation position. Registration in 2 days
12:30
for 100 euros survives. Board-level employee participation
12:34
follows the rule of the country where the company has its registered office. The Council
12:38
limits the stock option tax treatment to companies
12:43
up to 750 employees and €150 million in
12:46
turnover, and it sets a 21-month
12:50
implementation period after the regulation enters into force.
12:55
The European Parliament had not adopted its position
12:58
by late October. Reports say the Legal Affairs
13:02
Committee vote was postponed twice in October
13:06
over employee participation. Negotiations with the Council
13:10
cannot start until Parliament has voted.
13:14
Why it matters structurally: EU Inc. fixes the
13:18
first day of company's life. Much of the cost of
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fragmentation comes later: employment law,
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payroll, local tax, sector licenses. Those
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stay national. On the stock options, the Council's limit
13:33
could exclude larger scale-ups. What happens to options
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granted before company crosses that line is not
13:41
yet clear, and that needs to be clarified before
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founders can plan around it. Here's
13:48
my own arithmetic on the timeline, and it is
13:51
an estimate, of course, not a fact. If
13:55
Parliament votes in the coming weeks, negotiations with the
13:59
Council run into 2027. After the
14:02
agreement comes formal adoption, publication, and entry into
14:06
force. Add the Council's 21 months and the
14:10
first registration lands somewhere in
14:13
2029. That is where my forecasts
14:17
later in this episode comes from. What people
14:20
get wrong: they treat EU Inc. as the market
14:24
test. It is the entry ticket. Market
14:27
test is whether a company in Munich can hire in Lisbon,
14:31
sell to Warsaw, and grant equity in Vienna
14:35
without rebuilding its legal setup each single time.
14:39
Before the demand test, which is whether evidence is more encouraging
14:43
than people think, a quick word from our partners.
14:52
Startuprad.io helps selected partners reach founders, investors, and operators across
14:56
Europe, especially Germany, Austria, and Switzerland. If you want
14:59
to build credibility with these decision-makers, explore a partnership
15:03
at startuprad.io/become-a-partner.
15:08
And stay with me because after the demand test, I will give you a
15:11
forecast you can hold me to.
15:16
Test number 3, demand. Will you buy what it builds?
15:20
And here I want to start with a
15:23
counterexample to my own series. Yes, I know.
15:27
In part 4, we called it demand without deployment. Public
15:31
money funds the supply of innovation, but the public buyer
15:35
does not become the customer. Now look at ICEYE.
15:38
According to EQT's announcement,
15:42
ICEYE already delivers sovereign satellite systems
15:46
for 7 European governments, and it's delivered an operational
15:49
capability to Poland less than 12 months after the
15:53
contract was signed. ICEYE shows that European
15:57
reference demand can work. A
16:00
European company won European governments as customers and
16:04
delivered it under a year. The question for
16:08
2031 is not whether this is possible, it
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is whether it becomes routine across sectors
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for companies that are not already leaders.
16:19
Count the repeat contracts, not the pilots. A
16:23
pilot tells you a buyer is curious. A repeat contract
16:26
tells you a buyer depends on you.
16:31
What happened to the rules? On
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the 9th of September 2026, the Commission proposed the
16:38
Public Procurement Act, one directly
16:42
applicable regulation instead of 3 directives:
16:47
a European preference in awarding contracts,
16:51
simplified procurements that the Commission says will
16:54
save public buyers time, and a minimum 30%
16:58
weight for quality criteria, innovation among them,
17:02
subject to the comply or explain rule. The political
17:06
target is to conclude negotiations by the end of
17:09
2027. So why does this matter
17:13
structurally? The proposal does contain machinery
17:17
meant to make procurement faster and reward
17:20
quality. What is unproven is whether it will.
17:25
Comply or explain lets a buyer opt out with a
17:29
reason. Simpler procedures save time on paper.
17:32
The test is the time from tender to deployment in
17:36
practice. What I will measure:
17:40
for the cohort, announced European public or industrial
17:44
contracts and how many are repeat or framework
17:47
contracts. At the system level, time from tender
17:51
to operational deployment where buyers publish it.
17:55
Test number 4, people and experience compound.
18:00
In part 5 of the series that We argued
18:04
that Europe produces talent, but scaling experience
18:08
does not recycle fast enough, meaning
18:12
employees who once scaled go back into companies
18:16
that are scaling. The operator who took a company from
18:20
100 to 1,000 people should become the angel,
18:24
the founder, or the board member of the next companies.
18:27
2 signals matter. First, employee ownership.
18:31
Equity that employees build is what can turn
18:35
operators into angels, which is why the scope
18:38
of the EU stock option rule matters. Second, where
18:42
founders and operators base themselves. Atomicos'
18:46
2025 Founder Survey found that 15% of
18:50
surveyed founders had moved their headquarters abroad,
18:54
and 57% of those had moved to the United States.
18:59
What people are getting wrong here— they count startups founded
19:03
and visas issued. Those are inputs. The
19:06
outcome is experienced people building the next company
19:10
in Europe. What it will measure for the cohort:
19:14
new companies founded by alumni of cohort
19:17
companies and where those new companies are based. The
19:21
baseline goes into the first annual scorecard in November
19:24
2027. Test number 5, retention. Do
19:28
the winners stay? This is capital gravity
19:32
turned into a scorecard line, and I want to be precise about it.
19:36
Some good news first. EY reports that European IPO
19:40
numbers rose 35% and proceeds
19:43
28% in the first 3 quarters of 2026
19:47
compared with the previous year. On the 8th of
19:51
October, the council agreed a position agreed-to position
19:55
that would move supervision of largest trading venues
19:59
and post-trade infrastructure to the European Securities
20:03
Regulator, ESMA. Now the position—
20:08
we score retention as 4 separate indicators,
20:12
not simply one. Where's the parent company incorporated?
20:16
Where does the chief executive work? Where is senior
20:20
commercial leadership based? And where is the company listed
20:24
or expected to list? A US listing
20:28
alone is not a failure. A US sales team
20:31
alone is not a failure. What we look for is the
20:35
pattern— several of those moving out of Europe
20:39
while the engineering stays. And remember the definition: a parent
20:43
company in Zurich or London counts as European in our
20:47
scorecard. The sequencing gap.
20:51
Now put the 5 tests on a timeline.
20:55
Capital arriving now. The Scaleup Europe Fund has
20:58
been investing since August 2026.
21:02
ETCI 2.0 is fundraising.
21:06
The market arrives later. EU Inc. is not
21:09
law. Parliament has not voted and the Council's
21:13
text gives member states 21 months
21:17
after the entry into force. Procurement reforms arrive
21:21
later still. Agreement is targeted for the end of
21:25
2027, and then it has to be applied.
21:29
So many companies financed by Europe's new growth money will scale
21:33
for some years under today's rule. Some
21:37
will do it very well, as ICEYE shows. The
21:41
risk is that others will need to move their
21:44
strategic center to get the next round— the customers or
21:48
the listing. That is the sequencing gap. It is a
21:52
risk to test, not a verdict.
21:56
3 scenarios for 2031.
22:00
Scenario number 1: Sequence Europe. EU Inc.
22:04
is agreed in '27. and becomes usable
22:08
in '29 with employee equity that still works for
22:12
larger companies. The procurement act is agreed and buyers
22:15
start running repeat contracts with young companies.
22:19
The growth funds reach their targets and keep investing through a
22:23
downturn. In that world, most cohort companies
22:27
pass most tests. Another
22:30
scenario, scenario number 2. Capital First Europe, the funds
22:34
deploy, but market rules stays national in practice.
22:38
Europe gets more large rounds, and a meaningful share of
22:42
cohort companies move their parent company or leadership abroad to
22:46
reach the next stage. The capital test improves, the
22:49
retention test does not. And on today's legislative
22:53
calendar, I think this scenario deserves some
22:57
serious weight. Scenario number 3,
23:01
stall. A downturn arrives before the instruments
23:05
are completed. Institutional investors pull back,
23:08
targets slip, and legislative piles lose
23:12
priority. What separates scenario
23:16
1 from number 2 is timing. The decision
23:19
about where a parent company sits often comes around the later
23:23
growth rounds or before an IPO. For companies
23:27
raising large rounds in '27 or '26,
23:31
that is roughly '28 to 2030. The
23:35
window is real and is narrow.
23:40
What would prove us wrong? Every thesis
23:43
in this series should be falsifiable. So
23:47
here's what would prove This one wrong.
23:52
First, most cohort companies pass retention tests
23:56
under today's rules. Before EU Inc. and
23:59
procurement reforms apply, then the sequencing gap was
24:03
not binding. Capital was enough, and I will say so
24:07
on the show. Second, if the
24:10
cohort shows relocations even after
24:14
reforms are in place, then the problem was never the order of
24:18
the instruments. It was something deeper,
24:21
like market size or valuation, and the next part of this
24:25
series will have to go there. Third, if
24:29
European public and industrial buyers turn more cohort
24:32
companies into repeat customers, as ICEYE
24:36
shows is possible, the demand test passes and
24:39
part 4 of this series Needs an update.
24:43
That would be actually a good problem to have.
24:49
Milestones we'll be watching, '27 to 2031.
24:54
The milestones I will track, in order: next
24:58
European Parliament's vote on EU Inc. Until that
25:02
happens, nothing can be negotiated. January
25:05
'27, we freeze and publish the 2026 cohort.
25:10
In '27, Whatever the scale-up your
25:13
fund publishes as a closing figure and whether
25:16
ETCI 2.0 confirms the
25:20
size of its first closing. By the end of
25:23
'27? Whether the Public Procurement Act and the
25:27
Savings and Investment Union supervision package are
25:30
agreed, as the political targets say. The
25:34
Commission is also due to report on its startup and scale-up
25:37
strategy By the end of '27. November
25:41
'27, 12 months out, the first annual
25:44
scorecard for the cohort, then every November until
25:48
2031. Forecast.
25:51
Here's my forecast on record. No company will be able to
25:55
register as an EU Inc. anywhere in
25:59
the European Union before January 1st,
26:02
2029. My confidence is 70%.
26:07
The reason is simply the calendar. As of
26:10
late October 26th, the European Parliament had
26:14
not adopted its position, and negotiations with the
26:18
member states cannot start until it does.
26:22
This sits next to our earlier forecast,
26:26
not instead of it. The Part 6 forecast, no EU
26:30
Inc. before January 1st, 2028, at 75% stays on
26:34
record. And it will be scored on that date.
26:38
2 more predictions. First, the Scale-Up Europe Fund will
26:42
not publicly confirm that commitments of €5
26:45
billion or more before June 30th,
26:49
2027. Confidence 65%.
26:52
Second, the Public Procurement Act will not be
26:56
formally adopted before end of '27.
27:00
Confidence 65%. And our part 6
27:03
forecast stays open as originally worded.
27:07
By the end of '27, at least one scale-up fund Europe
27:11
portfolio company will have a parent holding company
27:15
outside of the EU. Note that this one is
27:19
about the EU, so a Swiss or British parent
27:23
would count. Still 60%.
27:27
Our synthesis. So what connects all of this?
27:31
Europe's instruments are no longer missing. Their timing is
27:35
uneven and their effect is unproven. Each
27:39
test depends on the others. Growth capital helps most
27:43
when the company can also hire, sell, and grant equity
27:47
across Europe, and when European buyers become repeat
27:50
customers. The game changes when the
27:54
5 tests turn green for the same companies at the same
27:58
time. And if the cohort shows that companies
28:01
scale globally and keep their strategic center in
28:05
Europe under today's rules, we will say so.
28:08
Operator and investor split. If I were
28:12
fundraising in '27, I would do 3 things.
28:17
I would plan my next growth rounds as a sequence and
28:20
ask every lead investor in writing whether
28:24
any future round assumes a change of parent company or
28:28
listing venue. I would build an employee equity
28:32
plan that works today across countries and can migrate
28:36
later rather than waiting for EU Inc.
28:40
And I would decide deliberately where my first
28:43
large reference customer comes from. For some companies, early
28:47
US expansion is right commercial decision. If you go to the
28:51
US first, decide in advance which functions
28:55
and which decision rights stay in Europe.
28:59
If I were an investor, I would underwrite European growth rounds
29:03
on the follow-on path, not the single check. I would
29:07
track the full retention indicators for early growth stage
29:11
companies separately, and I would treat the €100
29:14
million line as the point where your
29:17
co-investors are now present and worth bringing in early.
29:22
If you want to go deeper, the
29:26
Startuprad.io Founder Vault contains the working tools
29:29
behind this episode: our Scale Infrastructure Scorecard,
29:33
the indicators we are tracking through
29:38
2031, and practical questions for growth
29:41
financing and corporate location decisions. Members also
29:45
get our analysis of targets,
29:48
commitments, and actual capital deployment, plus the
29:52
investor diligence checklist. Join through YouTube
29:56
membership or Substack. Both links are
29:59
in the show notes.
30:03
Thank you for listening to part 8 of the European Scale-Up Question. The
30:07
single idea to take you— to take with you A program
30:11
is an input. A company scaling differently is an outcome.
30:15
We have fixed the cohort rules today, so we cannot
30:19
choose the answer later. We'll come back to this
30:23
every November until 2031. If
30:27
If this analysis helped, share it with a founder
30:31
or investor facing a major growth decision. And if
30:34
you know a European company that challenges our thesis,
30:39
send us the evidence. Subscribe to Startuprad.io for future
30:43
updates to the scorecard. All eight parts of the
30:47
series are linked in the show notes. This was Startuprad.io.
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My name is Joe. Take care and see you next time. Bye.