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Around 2,000 people pitched up at the European Innovation Council’s ( EIC ) two-day Summit that concluded in Brussels on June 4th. That’s a reasonable turnout ( from 3,000 registered ) and illustrates the lively interest in the innovation ecosystem in Europe across the full range of market constituents: from start-ups and scale-ups, to financiers, advisers and investors, to policymakers, politicians, regulators and technocrats.
One area that has become critical since Europe entered today’s brave new geopolitical world is what steps policy makers are taking to mobilize funding for innovative companies, entrepreneurs and ideas in critical areas like technology/deep tech, healthcare/medtech and energy in order to gain regional autonomy.
Europe’s problem is not lack of ideas, but policy makers are rightly alarmed that European companies lack a vital link in the evolutionary funding chain: late-stage capital requiring €100 million ( US$116.17 million )-plus investments, which allow promising recent start-ups to develop and grow into global leaders while remaining in Europe and ultimately listing locally supported by European investors.
The current playbook sees innovative European companies selling too soon or choosing to list outside Europe where they can access better liquidity and valuations. All because they can’t get the patient capital with big tickets close to home willing to fund their transition.
This very topic was recently taken up by Jean-Pierre Mustier, one of today’s most influential banking statesmen, in a submission to the Forum on Financial Supervision entitled “Europe’s savings glut won’t finance its future until it backs its own scale-ups”. Mustier called for the EU’s Savings and Investments Union project to “urgently consider measures to help channel Europe’s vast household savings into growth equity to finance scale-ups in defence, technology, health and energy”.
He suggested three actions: “broaden retail participation through simple investment accounts, create large public-private scale-up funds anchored by the European Investment Bank and introduce a ‘28th regime’ [an optional EU wide legal framework sitting above EU 27’s laws] to ease cross-border scaling”.
Late-stage fund
So, what is the European Union doing about this? Well, a couple of weeks ago, the EIC chose EQT, one of Europe’s largest and most globally active private markets firms, to be the preferred investment adviser and fund manager for the Scaleup Europe Fund, a new co-investment vehicle with a target size of €5 billion that will provide late-stage and growth capital to innovative deep tech scale-ups.
The fund will operate under the umbrella of the EU’s Startup and Scaleup Strategy, which European Commission president Ursula von der Leyen announced in her 2025 State of the Union Address, with the aim of making major investments in fast-growing companies in strategic technology areas.
The EIC opted for a privately-owned, market-based fund manager to ensure independent and market-based investment decision-making. The fund has been designed as a coalition of founding investors from some of Europe’s largest institutional capital pools. EQT said it would make a significant commitment of its own capital to the Fund. The European Commission is also a founding investor and will participate on equal terms with the other founding investors:
Other investors have also reportedly signalled interest. The fund is the largest of its kind ever mobilised in Europe the EIC claims, and will focus on strategic deep-tech sectors, such as artificial intelligence, quantum technologies, dual-use ( civilian and military ) technologies, clean energy, space technology, biotech and medical innovation, advanced materials and agritech.
The fund will finance privately-owned European companies from Series B onward and is set to make its first investments later this year. The fund was presented at the EIC Summit in Brussels and will be promoted at other key events.
Sister fund
The Scaleup Fund will sit alongside the EIC Fund, the EIC’s original investment arm set up in 2021. The EIC was established under Horizon Europe, the key EU research and innovation funding programme that was allocated €95.5 billion of funding out to 2027.
As a dedicated Horizon programme, the EIC has a budget of €10.1 billion to fund breakthrough technology and disruptive innovation throughout the corporate lifecycle from early-stage research, to proof of concept, technology transfer, and the financing and scale up of start-ups and SMEs. Programme implementation is delivered by the European Innovation Council and SMEs Executive Agency.
The track record of the initial fund suggests the scale-up fund has potential. The EIC Fund now has a capitalization of over €4 billion and has become one of the largest deep tech investors in Europe, with a portfolio of nearly 350 companies.
The fund invests equity directly in EIC accelerator companies or provides quasi-equity. Since inception, the fund says it has invested over €1.7 billion and mobilised over €5 billion in co-investments from more than 1,000 investors, leveraging each euro invested from the EU budget by 3.5 times. EIC Fund investments resulted in three portfolio companies achieving unicorn valuations in 2025, plus 12 exits and 12 equity rounds of above €100 million.
The Scaleup Fund will go beyond what the EIC Fund offers by providing access to capital in the range of €100 million and above. The EIC Fund is restricted to €30 million tickets per company. While the two funds won’t have any formal or mandatory linkage within the EIC portfolio, the current EIC Fund universe may serve as a potential pipeline for the Scaleup Fund.
The Scaleup Fund will be open to “companies located in or intending to locate to any EU member state or countries associated with Pillar III of Horizon Europe, and which are developing strategic technologies and seeking major investment amounts in growth and scaleup stages”. That includes the EU 27, plus another 15 or so non-EU countries in Europe/Eurasia.
As a regional autonomy play, investments by the Scaleup Fund will crowd non-European investors out of large funding rounds, “[helping] to reduce the risk of strategic disadvantages, such as relocations, foreign control and talent outflow”.
At a target €5 billion, the Scale-up Fund on its own won’t be enough. But it’s a start. And as arguably the first attempt by Europe to build a sovereign late-stage capital instrument designed not just to fund growth but to keep Europe’s future industrial champions European, it’s a start with strong signalling intent.
