With our partner Salesforce, unify sales, marketing and customer service. Accelerate your growth!
The new annual report from the ATOMICO investment fund has just been released and while it paints a landscape of European tech that stands out for its progress, it highlights a major structural limit: fragmentation.
With more than 35,000 early-stage startupsa quadrupling in less than ten years, and investments multiplied tenfold since 2015, Europe proves that it can compete in ambition and innovation. However, at each critical stage – fundraising, expansion or transnational collaboration – administrative and regulatory barriers slow down this dynamic.
We were unable to confirm your registration.
Your registration is confirmed.
While American startups enjoy seamless access to a unified market, European entrepreneurs are still trapped within bureaucratic borders. Andreas Klinger, investor at Prototype Capital, sums up the problem well: “Our founders raise funds in national silos. This fragmentation hinders our ability to compete globally. »
Faced with this challenge, a solution is emerging: the creation of a single legal framework nicknamed the “28th Regime”Or “EU Inc”an idea that could significantly change the way Europe structures and supports its technological ecosystem.
Costly fragmentation
Currently, each European country imposes its own tax, administrative and regulatory rules. For a startup, this often means recruiting legal teams specific to each market, adjusting internal processes, or even juggling sometimes incompatible incorporation rules. Result: less than 18% of early investments cross European borders. The potential for transnational collaboration, essential for driving innovation and attracting funding at scale, remains largely underexploited.
This problem is not limited to the first phases: European startups are half as likely as their American counterparts to raise growth financing rounds exceeding 15 million euros. This weakness is partly explained by the lack of transnational investors. European pension funds, which manage a colossal capital of 9 trillion eurosinvest only a negligible fraction — 0.01% — in venture capital. Comparatively, their American counterparts allocate almost three times as much.
The “28th Regime”: an accelerator for innovation
The “28th Regime” is based on a simple idea: harmonize the rules to create a single market dedicated to startups. This legal framework would offer companies a common basis for contracts, taxation, and fundraising, thus reducing administrative barriers.
This project could also attract European institutional investors, who have until now been cautious about the complexity of the system. With a simplified regulatory environment, pension funds and insurers would have the means to inject billions of additional euros into European companies. As Tom Wehmeier, author of the report, points out State of European Tech 2024“If we integrate our markets, we will no longer need to compare our journey to that of the United States. We will be able to chart our own path. »
Colossal transformation potential
Adopting a framework like the “28th Regime” could not only close the funding gap 375 billion euros which slows down companies in the growth phase, but also offers startups the necessary tools to develop beyond national borders.
The impact would not only be economic. With harmonized rules, Europe could become a fertile ground for innovations responding to global societal challenges, particularly in the areas of sustainability, renewable energies and even health. These efforts could give rise to the first European tech giants reaching a trillion-euro valuation, a goal many considered unrealistic a decade ago.
Interesting initiatives
National initiatives are already showing the way. In France, the Tibi initiative mobilized 6 billion euros to finance tech startups, while in the UK, the Mansion House reform aims to free up more institutional capital.
Charting a path specific to Europe
Europe has the ingredients to become a global technology leader: a growing talent pool, key innovation sectors like AI and fintech, and a strong commitment to sustainable technologies. But without further integration of its markets, it risks remaining a patchwork of local successes without real cohesion.
As Sarah Guemouri, partner at Atomico, summarizes: “European market integration is not just a question of simplification. This is a crucial step in unlocking the full potential of our technology ecosystem. »
Summary of key figures from the “State of European Tech 2024” report
💰Investment growth
- Total investments (2015-2024): 426 billion dollars, a 10-fold increase compared to the previous decade ($43 billion from 2005 to 2014).
- Annual investments in 2024: $45 billion planned, a stable level compared to 2023 ($47 billion).
- Compound annual growth rate (CAGR) of investments (2015-2024): +13%, highest among major regions (US: +8%, China: +2%).
- Growth phase financing: A deficit of 375 billion euros over the last decade.
🚀 Evolution of the ecosystem
- Number of early stage startups: 35,000 in 2024, compared to 7,800 in 2015 (+4.5x).
- Number of scale-ups: Multiplication by 8, reaching more than 3,400 companies in 2024.
- Unicorns in Europe: More than 300 companies valued at over a billion dollars.
👩💻 Jobs and talents
- Tech jobs in Europe: 3.5 million, with an annual growth rate of 24% since 2015.
- 2.5 million jobs created in European tech since 2015.
- In France, tech jobs have gone from 63,000 in 2015 to 517,000 in 2024.
- 44,000 active positions in AI in France, placing it at the 4th European rank behind the United Kingdom, Germany and the Netherlands.
🛑 Structural challenges
- Transnational investments: Only 18% of early stage funding is pan-European, reflecting market fragmentation.
- Pension fund investments in venture capital: 0.01% of their assets in Europe, compared to 0.03% in the United States.
You can find the full report on the ATOMICO website
