EU arranges €5 billion package to keep tech firms from moving abroad

European Officials Launch Ambitious Scaleup Europe Fund to Retain Tech Talent

European officials are racing to assemble a massive investment fund aimed at helping the continent keep its most promising tech companies, rather than watching them get acquired by American giants. At the heart of this initiative is the Scaleup Europe Fund, which is already attracting attention from some major players.

Key Backers and Funding Goals

Denmark’s EIFO sovereign wealth fund is considering an investment, alongside Spain’s Criteria Caixa SA and the Novo Nordisk Foundation. The fund is currently targeting an initial €5 billion (approximately $5.8 billion USD). So far, commitments totaling €3 billion have been secured, with an additional €1 billion expected from the European Innovation Council — the EU’s own tech accelerator.

However, this is just the beginning. According to a spokesperson for the European Commission, the ultimate goal is to raise €25 billion. This ambitious target underscores how seriously officials view the challenge of retaining Europe’s top tech talent.

Upcoming Pitch to Investors

A major meeting scheduled for Tuesday will see European Commission officials present the fund’s vision to potential new backers. The European Investment Bank will also attend, though it has yet to decide whether to participate.

Focus on Large-Scale Investments

The fund targets larger investment deals, specifically those exceeding €100 million. This focus reflects Europe’s determination to support companies poised for significant growth and global impact.

Addressing Europe’s Tech Talent Drain

Europe has faced a recurring problem of losing its best tech companies to foreign acquisitions. For example, Advanced Micro Devices (AMD) purchased Finnish AI lab Silo AI for $665 million last year, while Apple acquired French AI firm Datakalab in 2023. This ongoing pattern has raised concerns among EU officials seeking to reverse the trend.

Supporting Strategic and Enabling Technologies

Any company receiving funding from the Scaleup Europe Fund will be required to maintain its headquarters and primary operations within Europe. The fund will focus on nurturing strategic and enabling technologies, including robotics, advanced materials, clean energy, and biotech.

To manage these investments, the EU plans to select an external fund manager by January 2026.

Europe’s Push for Sovereign Tech Independence

The fund’s launch coincides with Europe’s broader ambitions to reduce reliance on the U.S. and China amid ongoing trade tensions. As part of this strategy, billions have already been pledged to homegrown artificial intelligence ventures, signaling a continental race to build sovereign AI capabilities.

Industry Experts Question Fund’s Size

Despite enthusiasm for the initiative, some industry experts express doubts about whether the fund is large enough to meet Europe’s needs.

Andreas Schwarzenbrunner, a partner at venture capital firm Speedinvest GmbH, acknowledges the Scaleup Europe Fund as a positive step but warns its size may be insufficient. “While the €3 billion commitment is a positive signal, even €5 billion remains tiny compared to what’s happening globally,” he said.

Schwarzenbrunner emphasized that Europe must dramatically increase investment to compete effectively. “If AI, quantum, and other key technologies will define Europe’s future competitiveness, we need to spend an order of magnitude more, and the EU needs to be a much larger anchor.”

Closing the Tech Talent Gap

European entrepreneurs have long lamented a funding gap, particularly during crucial growth phases when founders must decide whether to sell out, relocate to Silicon Valley, or risk their companies fading away.

The Scaleup Europe Fund represents Europe’s latest effort to stop bleeding tech talent to other continents and build a stronger, self-sustaining tech ecosystem at home. Its success could shape the future competitiveness and innovation capacity of the continent for years to come.
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