A shifting startup landscape: The time is now to go all in

This week I had the pleasure of joining the Europe Startup Nations Alliance (ESNA) Forum in Brussels and the week before I joined Slush, the world's leading startup event in Helsinki. Taking a deep dive into the electrifying world of startups, one theme kept coming up: the startup landscape in Europe is currently evolving at a quicker pace than ever before and now is the time to go all in, maximize efforts and hit new heights.

Why now? The State of European Tech Report provides the numbers that prove that there is a momentum that Europe needs to act on. Europe’s tech talent pool has grown 7x, having reached a whopping 3.5M in 2024. Over a 20-year horizon, the ecosystem has grown immensely, enabling this talent to thrive. There are at present 35.000 early stage companies, 3.400 late stage companies and 358 unicorns – up by almost 5 times since 2015.

When it comes to investments, the report states that the total funding over the past 10 years is 10 times higher than that of the previous decade, going from $43B to $426B. To put this into perspective, the report states that $45 billion will likely be invested in 2024 alone, which is more than the total investment of the past decade. In comparison, the US saw a 2.8x growth during the same period, rising from $249 billion to $1.2 trillion.

As the report concludes, we have the foundations – talent, capital, mindset – and now is the time to jump some hurdles and match growth funding supply and demand. One of the solutions proposed is already embraced by several European countries and reflected in measures such as France’s Tibi initiative and the UK’s Mansion House Compact, both looking to increase the share of pension funds invested in European VCs.

This is also echoed in the European Investment Bank’s (EIB) 2024 report The Scale-Up Gap: Financial Market Constraints Holding Back EU Firms. As rightly pointed out during the ESNA Forum by Chiara Fratto, Economist at EIB who presented the report, the problems encountered can and should be solved at home. According to Fratto, being near the sources of financing is important to receive financing. And numbers show that money does exist in Europe yet there is a strong need to find a way to channel it into investments for innovative companies. The recommendations on how to close the scaleup gap include pursuing a fully unified IPO market, mobilising institutional investors and harmonising insolvency regimes all the while using public support to catalyse private investment and de-risk early innovations.

At the same time and though at the core shared action will likely make the most difference, there is a growing number of countries looking for solutions and innovative means to address problems at the national level. During the ESNA Forum, we heard of the different policies and good practices in place in various countries and shared the CY experience and own good practice of bundling blended finance schemes with government tax incentives and expert support. From Austria’s Flexible Company and Tax Law on employee participation to Ireland’s Pre-Seed Start Fund and Luxembourg’s GovTechLab for collaborations between the government and innovative companies to co-develop digital solutions, a key takeaway is that each country has a different approach, yet all recognize the immense value that can be generated through targeted measures and, well, action!

Afterall, policies, reports and good practices are important, but they mean nothing without bold steps to back them up, create real change and fuel Europe’s startup ecosystem to rise higher than we ever imagined. And there is no time like the present.