EU leaders risk breaking their promise to help European start-ups

In an opinion column, Martin Sandbu argues that Europe's gap with the US in scaling tech companies is real and comes from two things: thin venture funding and 27 fragmented national regimes for company, insolvency, tax and labour law. On funding, he cites the OECD: US venture investment has run at 0.5-1% of GDP over the past decade, the largest EU economies at a tenth of that or less, and even the best European performers (Sweden, the Netherlands, Switzerland, the UK) at most 0.2% of GDP. The EU has two answers. The first is the Scaleup Europe Fund, launched by the Commission, managed by EQT and seeded with €1bn from Brussels towards a €5bn target; Sandbu calls it 'a drop in the ocean' but a promising new approach. EQT partner and fund co-head Victor Englesson says 'We need trillion-euro companies in Europe' and complains that European LPs back US venture funds that fly in, fund EU entrepreneurs, take a fee and fly back. The second is the '28th regime' or 'EU Inc', proposed by the Commission in March. Sandbu says member states have already watered it down: the single EU company registry and the common insolvency regime are gone, and harmonised employee stock option rules are confined to companies below a certain size. European Parliament talks risk chipping away further, and the alternative for founders remains Delaware incorporation. Englesson says EU Inc 'in its current form', with less harmonisation than founders ask for, is 'almost better not to do it'; MEP Eva Maydell says EU Inc could be the next big integration project like the euro or the single market and that policymakers are 'unable to recognise the potential'. His conclusion, as the author's view: EU leaders lack political ambition just as founders are more ambitious than ever. Caveats: this is an argument built on one OECD statistic and interview quotes, not new data, and Englesson has a stake as EQT runs the fund.