Source: EURLEX
Language: en
Format: md

EN

![](./../../../resource.html?uri=IMMC:EESC-2025-01043-AS.ENG.xhtml.EESC_2025_01043_AS_ENG_xhtml_06001.jpg)

INT/1089

Start-ups and scale-ups

OPINION

Section for the Single Market, Production and Consumption

European start-ups and scale-ups

(exploratory opinion)

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| Contact | [int@eesc.europa.eu](mailto:int@eesc.europa.eu) |
| Administrator | Marco MANFRONI |
| Document date | 4/9/2025 |

Rapporteur: Mira-Maria DANISMAN

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| Advisor | Tellervo KYLÄ-HARAKKA-RUONALA (to the rapporteur) |
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| Referral | Danish Presidency of the Council, 7/2/2025 |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 2/9/2025 |
| Outcome of vote  (for/against/abstentions) | 80/1/0 |
| Adopted at plenary session | D/M/YYYY |
| Plenary session No | … |
| Outcome of vote  (for/against/abstentions) | …/…/… |

1.Conclusions and recommendations

1.1This EESC opinion, requested by the Danish Presidency of the Council of the EU, evaluates the operating environment of EU start-ups and scale-ups, highlights the measures needed to overcome their challenges and tap into opportunities, and provides feedback on the Start-up and Scale-up Strategy
[1](#footnote1)
 recently adopted by the European Commission.

1.2The EESC emphasises that the success of start-ups and scale-ups depends on competitive access to resources and to product markets, and on a supportive regulatory and fiscal environment for innovation, investment and trade. It welcomes the Commission’s strategy in this regard, including the introduction of common definitions, but underlines the need for additional efforts to promote entrepreneurship and business development more broadly. In addition, the EESC considers it necessary to incorporate a scaling-up perspective in all business-related policy and regulatory initiatives.

1.3The EESC stresses that a well-functioning EU single market is essential for enterprise growth and upscaling and for dynamic start-up ecosystems. Urgent action is needed to remove remaining regulatory barriers to single market freedoms, and to enforce existing single market rules effectively.

1.4The EESC stresses the importance of the better regulation principle, guided by thorough impact assessments that cover entire value chains and all stages of the legislative process. In this regard, it calls for proper implementation and follow-up of an innovation stress test and a competitiveness check.

1.5The EESC advocates simplifying the regulatory framework and streamlining administrative processes while maintaining social, environmental and governance standards, promoting overall economic, social and environmental sustainability. Regulatory sandboxes are an important factor in accelerating the market uptake of innovative products and technologies.

1.6Both private and public funding are crucial to improving access to finance for start-ups and scale-ups. EU funds should leverage and derisk private investment. The EESC stresses that scale-ups’ financial needs require immediate solutions across the entire investment chain, without waiting for the next Multiannual Financial Framework (MFF).

1.7To foster a stronger entrepreneurial mindset across Europe and reduce the stigma of business failure, the EESC calls for a thorough review to identify and remove both legislative and non-legislative obstacles that hinder entrepreneurs from seizing a second chance after business failure.

1.8The EESC also calls for an evaluation of how the tax conditions can be improved for start-ups and scale-ups, including a study of best practices in Member States and a comparative analysis of the treatment of start-up equity in the US and other competing economies.

1.9Robust efforts are needed to strengthen STEM skills and to integrate entrepreneurial competences and skills into all education levels. The EESC also advocates enhancing labour market dynamism, improving the cross-border mobility of talent within the EU, and streamlining administrative procedures for highly skilled workers and for start-up founders and entrepreneurs from outside the EU.

1.10The EESC considers it vital for start-ups to have access to high-level research and technology infrastructure, including advanced digital infrastructure such as supercomputers and AI factories. The EESC also calls for new enterprises to be given tailored support to help them commercialise their products, with targeted efforts to improve their access to business ecosystems and collaboration opportunities. The EESC also emphasises that smooth access to internal and international markets are fundamental prerequisites for upscaling business.

1.11The EESC calls for phased development of Key Performance Indicators (KPIs), to enable more comprehensive and outcome-oriented monitoring of start-up and scale-up activities and to enable more specific target-setting.

2.Background and scope

2.1This exploratory opinion, requested by the Danish Presidency of the Council, examines the role of start-ups and scale-ups in the EU economy and provides views on the EU Start-up and Scale-up Strategy published by the European Commission during the preparation of the opinion.

2.2There is not yet an EU-wide legal definition for start-ups or scale-ups; however, ‘start-up’ usually refers to young, innovative companies aiming for rapid growth, focusing strongly on innovation and often relying on equity and venture capital. Scale-ups in turn are enterprises that have moved beyond the start-up phase and are experiencing significant growth. According to the Commission, scale-ups are defined as enterprises with an average annualised growth greater than 20% per annum over three years, measured by the number of employees or by turnover
[2](#footnote2)
.

2.3Start-ups and scale-ups play a crucial role in the economy by enhancing innovation, productivity and growth. While European start-ups and scale-ups have many strengths, particularly in fintech, artificial intelligence (AI), and sustainability-focused technologies, they also face a number of challenges that could be fatal to their ability to scale up and remain in the EU. The Commission’s strategy aims to enable them to thrive in the EU and to overcome single market hurdles, particularly those related to finance, regulatory environment, talent, infrastructure and market uptake.

3.General comments

3.1The success of start-ups and scale-ups depends on the same preconditions as any business, i.e. on competitive access to resources and product markets, a supportive regulatory and fiscal environment for innovation, investment and trade, and a societal climate that fosters entrepreneurship – alongside their own creativity and willingness to take risks.

3.2The EESC commends the Commission on its strategy, which incorporates many of the ideas presented in this opinion. The EESC believes that the strategy sets the EU on the right path towards improving the environment for start-ups and scale-ups in Europe. It is, however, important not to consider start-ups and scale-ups in isolation from other businesses: they are an integral part of business ecosystems and value chains.

3.3While start-ups and scale-ups play a crucial role in the economy, it is also necessary for the EU to promote the success of enterprises of all kinds. The EESC also notes that not all high-growth enterprises are high-tech enterprises, and that cross-sectoral action is needed
[3](#footnote3)
. The widening productivity gap between SMEs and large enterprises in Europe calls for broad measures to boost the productivity of all SMEs
[4](#footnote4)
. Specific attention should also be paid to increasing diversity in start-ups and scale-ups, particularly in terms of entrepreneurs of all ages and female entrepreneurs.

3.4In addition to start-ups, there are restart-ups, referring to existing businesses that are transferred to new owners. These transferred businesses often experience higher growth rates compared to other existing firms, and consistently outperform traditional start-ups in survival rate, revenue, profitability, innovation, and job creation.

3.5The EESC supports the establishment of a Start-up and Scale-up Scoreboard to track ecosystem performance. Tracking the number of start-ups, centaurs, and unicorns is a good starting point but, at a later stage, the EU should develop a more comprehensive and outcome-oriented set of KPIs including metrics such as start-up survival rates, scale-up growth rates, and the availability of venture capital, to enable a more in-depth assessment of both the quantity and quality of entrepreneurial activity in Europe. The KPIs would also enable more specific and quantitative target-setting.

4.Supportive regulatory environment

4.1As start-ups primarily qualify as small and medium-sized enterprises (SMEs), this opinion also considers relevant issues from the broader SME perspective. Though start-ups and scale-ups have distinct characteristics, especially regarding their growth trajectories and innovation focus, the need for an enabling, predictable and encouraging regulatory environment is common to both, as it is to traditional SMEs that are not striving for rapid and strong upscaling.

4.2The EESC considers it necessary to incorporate the scaling-up perspective into all business-related policy and regulatory initiatives, in addition to the specific start-up and scale-up strategy. This applies both to the implementation of existing initiatives and to the development of any forthcoming ones.

4.3A well-functioning EU single market is crucial for the growth of EU enterprises and a dynamic start-up and scale-up ecosystem. Urgent action is needed to remove regulatory barriers to the free movement of goods, people, services and capital, and improve access to resources and market uptake of products. Better enforcement of the existing single market rules is essential to prevent fragmentation and ensure fair competition. Moreover, standardisation plays a key role in facilitating cross-border activities.

4.4The introduction of a ‘28th regime’, as proposed in the Commission’s strategy, would also facilitate upscaling in the single market. It should start with a pilot phase. While easing the cross-border operation of enterprises with EU-wide rules, the regime should, in line with the division of competences, ensure respect for labour standards, including appropriate social dialogue.

4.5The principle of better regulation, supported by thorough impact assessments across value chains and all legislative stages, should guide all EU regulatory work. The EESC highlights its previous opinions on an innovation stress test
[5](#footnote5)
 and a competitiveness check
[6](#footnote6)
, and urges the co-legislators to fully implement these tools.

4.6Simplifying regulations and reducing the bureaucratic burden, without compromising social, environmental and governance standards, is key to promoting overall economic, social and environmental sustainability. The Commission’s ‘omnibus’ packages aim to reduce administrative costs, estimated to be EUR 150 billion per year, with dedicated SME measures
[7](#footnote7)
.

4.7Regulatory sandboxes are necessary for start-ups to test their products and accelerate the market takeup of innovations. The EESC welcomes the Commission’s plan for a common legal definition of the concept. It is also vital to simplify and speed up permit and administrative procedures through digitalisation, while ensuring transparency. The European Business Wallet and the Unitary Patent System should be fully implemented to reduce administrative burdens.

5.Enhanced access to finance

5.1The EESC highlights the growing challenge European SMEs face in accessing finance. According to the European Central Bank (ECB), euro area banks have tightened access to corporate credit due to increased economic risks
[8](#footnote8)
. Some entrepreneurs and micro-SMEs also struggle to access basic banking services, such as accounts. Addressing these issues is essential to support business growth and upscaling in Europe.

5.2Access to finance remains a major barrier for European scale-ups, with venture capital funds still much smaller than in the US. The EESC supports the call made in the Draghi report
[9](#footnote9)
 to strengthen Europe’s financing ecosystem, from angel investors to EU-wide capital markets and improved stock markets for IPOs. Access to finance must be ensured across the entire investment chain from research and development to market expansion and internationalisation. A 28th legal regime could also help to build larger venture capital funds.

5.3Both private and public funding are important in improving access to finance. EU funds, such as the Competitiveness Fund, should leverage and derisk private investment in start-ups and scale-ups, directly or via venture capital funds. Urgent action – such as deploying the Scaleup Europe Fund – is, however, needed to meet scale-ups’ financial needs, without waiting for the new MFF. Deep-tech and breakthrough technology development requires a particularly patient and steadfast approach, given that the financial gains may only be achieved in the long run. Appropriate guarantees are also pivotal for high-risk activities.

5.4The EESC urges the EU to explore taxation measures that better support start-ups. Strict timeframes for deducting losses from profits can hinder start-ups, which often take longer to become profitable. Capital taxation should also encourage start-up entrepreneurs and business angels. Although taxation is a national competence, an EU-wide study would be useful for comparing practices and assessing the impact of the US system’s favourable start-up equity treatment, at both the employee and company levels, on relocation of start-ups.

5.5To build a thriving start-up ecosystem, the EU should make use of good practices in the Member States and eliminate the stigma around bankruptcy, improving entrepreneurs’ access to second chances and turning failure into an asset for the next stage. The EESC has previously called on the Commission to assess both legislative and non-legislative barriers in Member States that prevent European entrepreneurs from getting a second chance
[10](#footnote10)
.

5.6Start-ups may be acquired for growth or innovation, but some buyers might also pursue ‘killer acquisitions’ to halt innovation and block competition. A balanced competition policy is needed to prevent anti-competitive consolidations while supporting innovation, scaling and global competitiveness.

6.Easier access to talent

6.1About three in four European SMEs have reported
[11](#footnote11)
 that they face skills shortages for at least one job role within their company and find it challenging to recruit workers with the right skills. Additionally, over half of SMEs struggle to retain their skilled workers. Start-ups, often leading the way in innovation, are particularly affected by these shortages. Given the rapidly evolving nature of start-ups and scale-ups, European labour markets often lack sufficient dynamism to match their pace, hindering the ability of innovative enterprises to attract the talent required for scaling up.

6.2Raising education levels and supporting lifelong learning are crucial, especially for start-ups, which often rely on entirely new and innovative technologies and concepts as well as access to highly skilled workers. Efforts must focus on enhancing STEM skills, with the STEM Education Strategic Plan as a positive step. Empowering future entrepreneurs through education is vital for the growth of start-ups and scale-ups, yet only under 50% of EU students are exposed to entrepreneurial learning. Member States should integrate entrepreneurial competences and skills into education at all levels.

6.3Making use of flexible compensation possibilities is one way of attracting and retaining talent. Stock options for employees can be a relevant means for start-ups, from the point of view of both employees and founders. More traditional tools such as bonuses and non-monetary or monetary perks can also contribute to attracting skilled people.

6.4Enhancing cross-border mobility is key to addressing talent shortages in the EU. Streamlining processes for highly skilled workers and for start-up founders and entrepreneurs from outside the EU would help address labour shortages in critical sectors such as AI, software development and engineering, while boosting entrepreneurship. Fast-track visas for start-up and scale-up employees and entrepreneurs and simplifying permit procedures would ensure that businesses can attract and retain the talent they need without bureaucratic delays. The Commission’s planned EU Visa Strategy is a step in the right direction.

6.5Highly innovative start-ups, especially in deep-tech, health tech and advanced engineering, often rely heavily on individuals with advanced academic qualifications, such as researchers, doctoral graduates, and PhD students. This highlights the need to strengthen links between research institutions and entrepreneurial ecosystems.

6.6International cooperation in high-level research programmes is a key way of attracting global talent and strengthening European research and innovation ecosystems. The EESC welcomes the recent launch of the ‘Choose Europe for science’ initiative attracting top international researchers through long-term funding and improved research conditions.

7.Better conditions for innovation and market uptake

7.1Investment in research and development (R&D) is vital for start-ups, as they often lead the way in generating new knowledge, skills, and business models. Therefore, sufficient funding at both EU and national levels is crucial to support the start-up ecosystem and foster innovation-driven growth. To truly encourage groundbreaking innovation and high-tech start-up development and to succeed in competition with other economies, the EU should significantly increase investment in R&D.

7.2Academic research often generates breakthrough knowledge and technologies but, without strong links to the private sector, many of these advances remain underutilised. University incubators and businesses, particularly start-ups, can help translate research into real-world applications, creating products, services, and processes that address many kinds of societal needs, such as health, security and environmental needs. The European Innovation and Technology Institute (EIT) contributes to this by facilitating partnerships between various actors across Europe.

7.3As the EU renews the European Research Area (ERA), it is essential to recognise the role of innovative start-ups as both users and producers of high-level research. Strong business–research synergies are key to successful regional innovation ecosystems, knowledge hubs, start-up incubators, and industry clusters. Evaluating the operational practices of successful start-up incubators within higher education institutions could be beneficial for sharing success strategies.

7.4The EESC stresses the importance of enabling innovative enterprises, particularly start-ups, to access high-level research and technology infrastructure such as supercomputers and AI factories, along with tailored regulatory frameworks. Reliable digital infrastructure, secure access to large datasets, clean energy, and critical raw materials are essential elements of competitive high-performance tech environments.

7.5International connections and partnerships in research and technology boost EU excellence. At the same time, it is necessary to safeguard the EU’s economic security, including protecting the intellectual property rights of EU enterprises.

7.6Beyond favourable innovation conditions, new enterprises need tailored support for product commercialisation. Specific efforts must be focused on enhancing their access to cooperation in business ecosystems, where the European Corporate Network proposed in the Commission’s strategy could provide valuable opportunities for collaboration. The EESC acknowledges the wide-ranging role of research and technology organisations
[12](#footnote12)
 in generating breakthrough technologies and related spin-offs, and on the other hand enabling deep-tech start-ups to collaborate with industrial partners and providing support for market entry.

7.7Business and trade promotion organisations, for their part, help start-ups and scale-ups grow and reach new markets, e.g. by providing services and information on business conditions and demand in foreign markets. While the single market is vital for scaling up within the EU, trade agreements and international partnerships are key to helping in scaling up to global markets.

7.8Start-up and scale-up innovations can gain faster market uptake if public procurement prioritises innovative products and solutions, using transparent criteria to ensure fair competition.

Brussels, 2 September 2025.

The president of the Section Single Market, Production and Consumption

Sandra PARTHIE

\_\_\_\_\_\_\_\_\_\_\_\_\_

:   [(1)](#footnoteref1)
       European Commission, EU Startup and Scaleup Strategy – Choose Europe to Start and Scale, 
    [COM(2025) 270 final](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52025DC0270)
    , adopted 28 May 2025.
:   [(2)](#footnoteref2)
       European Commission, Scaleups drive innovation, 2021. 
    <https://data.europa.eu/doi/10.2826/78141>
    .
:   [(3)](#footnoteref3)
       
    [OJ C 288, 31.8.2017, p. 20](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2017.288.01.0020.01.FRA)
    .
:   [(4)](#footnoteref4)
       See European Commission, 
    [Annual Report on European SMEs 2023/2024](https://single-market-economy.ec.europa.eu/document/download/2bef0eda-2f75-497d-982e-c0d1cea57c0e_en?filename=Annual%20Report%20on%20European%20SMEs%202024.pdf)
    .
:   [(5)](#footnoteref5)
       OJ C, C/2024/2098, 26.3.2024, ELI: 
    <http://data.europa.eu/eli/C/2024/2098/oj>
    .
:   [(6)](#footnoteref6)
       
    [OJ C 100, 16.3.2023, p. 76](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=oj:JOC_2023_100_R_0011)
    .
:   [(7)](#footnoteref7)
       European Commission. A simpler and faster Europe: Communication on implementation and simplification (
    [COM(2025) 47 final](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52025DC0047)
    ).
:   [(8)](#footnoteref8)
       European Central Bank, 
    [The Euro Area Bank Lending Survey – First Quarter of 2025](https://www.ecb.europa.eu/stats/ecb_surveys/bank_lending_survey/html/ecb.blssurvey2025q1~dd155b616a.en.html)
    .
:   [(9)](#footnoteref9)
       Draghi, M., 
    [The future of European competitiveness – A competitiveness strategy for Europe](https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en?filename=The%20future%20of%20European%20competitiveness%20_%20A%20competitiveness%20strategy%20for%20Europe.pdf)
    , 2024.
:   [(10)](#footnoteref10)
       OJ C, C/2024/869, 6.2.2024, ELI: 
    <http://data.europa.eu/eli/C/2024/869/oj>
    .
:   [(11)](#footnoteref11)
       European Commission, 
    [Flash Eurobarometer 537: SMEs and Skills Shortages](https://data.europa.eu/data/datasets/s2961_fl537_eng?locale=en)
    , November 2023.
:   [(12)](#footnoteref12)
       
    <https://www.earto.eu>
    .

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