The EU Startup and Scaleup Strategy: A new blueprint for reindustrialisation?

With industrial ecosystems at the heart of Europe’s green and digital transitions, the recently published Startup and Scaleup Strategy represents not only mere support for startups but a blueprint for Europe’s reindustrialisation and technological leadership.

10% of the world’s advanced manufacturing firms are based in the EU. Despite Europe’s innovation strength, venture capital is struggling to connect with home-grown innovators. Globally, only one out of every EUR 10 invested in the industry reached European firms, highlighting the significant gap to be filled by financial markets, according to the European Commission.

For manufacturing – a sector deeply interlinked with innovation capacity and technological autonomy – the Strategy marks a long-overdue shift in policy focus. The commitment to foster and retain European-grown innovation directly aligns with EIT Manufacturing’s mission: to strengthen the EU’s manufacturing base through entrepreneurial education, industrial innovation and pan-European collaboration.

From vision to impact through effective implementation

The Strategy’s mission is clear: Choose Europe. In practice, this translates into reduced dependency on non-EU systems and rebuilding Europe’s sovereign innovation capacity. Yet for this ambition to translate into meaningful outcomes, implementation must be pragmatic, coordinated and aligned with the actual needs of startups and scaleups.

Europe’s innovation ecosystem has long been hindered by fragmented policies, slow market-entry pathways and limited access to growth capital, barriers that disproportionately affect manufacturing startups working on complex and often capital-intensive technologies. Looking at 2008-2021, nearly 30% of European ‘unicorns’ relocated outside the EU, while only 8% of global scaleups are based in Europe, according to the JRC technical report, 2022.

By putting startups at the centre and avoiding legislative overload, the Strategy can act as a catalyst for bringing deep tech solutions closer to market.

Ensuring regulatory coherence and agility

The Strategy has a strong cross-linkage with other EU initiatives, such as the Competitiveness Compass, the Union of Skills and the Single Market Strategy. But such coherence must be reflected in practice. It would be key to translate these linkages into coordinated actions during the implementation process to avoid duplication, fragmentation, or conflicting priorities.

Moreover, for startups in the manufacturing domain, scaling often stalls due to lengthy regulatory approvals and disjointed product certification processes. Accelerated standardisation, faster market-approval mechanisms and simplified procedures, especially for clean and critical industrial technologies, are essential. Without reform in these areas, Europe risks losing promising late-stage technologies to more agile innovation ecosystems overseas.

Skills and talent at the core of sustainable industrial growth

Manufacturing startups are only as strong as the talent behind them. The Strategy emphasises upskilling, reskilling and attracting global talent through initiatives like the Blue Carpet Initiative and the EU Blue Card and fast-track visas. These efforts come at the right time as Europe’s manufacturing sector is undergoing rapid technological change, from AI to additive manufacturing, and the workforce must evolve accordingly.

Incentives that increase startup competitiveness in the labour market, such as improving the tax treatment of employee stock options and equity-based incentives, are also crucial. Early-stage manufacturing startups often cannot compete with established firms on salary alone. Equity-based instruments help attract and retain engineers, designers and technologists who bring new products to life.

Finally, fostering a strong entrepreneurial culture starts with education. Promoting entrepreneurial learning at all levels, from vocational training to higher education, will be critical to equipping the next generation with the skills, mindset and capabilities to launch and scale innovative businesses in Europe.

Finance for scale where deep tech needs deep pockets

Europe’s persistent scale-up gap is particularly acute in manufacturing, where developing market-ready hardware and systems requires long-term capital. The creation of the Scaleup Europe Fund, along with the proposed Savings and Investment Union, is a promising move, but only if these instruments are deployed at sufficient scale and with a strategic focus.

As a key enabling sector, manufacturing touches every major EU priority, from energy and defence to circular economy and health. It is therefore essential that advanced manufacturing is explicitly prioritised in the investment mandate of these EU instruments.

Unlocking territorial potential from local roots to European scale

Manufacturing innovation often begins in regional ecosystems, such as clusters of SMEs, universities, corporates and startup communities. The Strategy’s emphasis on supporting startups and scaleups at both EU and Member State levels is a welcome step, but the place-based dimension remains insufficiently addressed.

Strengthening local innovation hubs, particularly through enhanced support from initiatives like the EIT Regional Innovation Scheme (RIS) and improved coordination via cohesion policy, will be vital to unlocking untapped potential.

A strategy for Europe’s industrial future

EIT Manufacturing welcomes the Startup and Scaleup Strategy, which arrives at a pivotal moment for European manufacturing. It acknowledges what industry stakeholders have long called for: an ecosystem approach that matches Europe’s industrial ambition with effective support for innovators.

Now is the time to turn vision into action through patient capital, cohesive skills policy and strengthened regional ecosystems. By doing so, the EU can position its manufacturing sector not just to survive but to lead in the next era of global innovation.