What Would Actually Change the Game? Europe's Scale Infrastructure, 2027–2031

23 hours ago

26 min read

Europe is adding growth capital faster than it is removing some of the barriers to scaling. That creates a risk that companies still need to relocate to grow. This final part of the series sets out how we will test that risk on a fixed group of companies, every year until 2031, and record the cases that prove us wrong.

What Is This About?

This is Part 8 of The European Scale-Up Question, Startuprad.io's research series on why Europe produces strong startups but few globally scaled technology companies. Parts 1 to 7 diagnosed the problem. Part 8 asks what would have to change between 2027 and 2031, separates announcements from outcomes, and introduces The Scale Infrastructure Scorecard: five tests applied each year to every European company that raised €100 million or more in 2026.

The video goes live on Thursday, November 5th, 2026

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Summary

Europe's scale-up instruments now exist but arrive at different speeds. Growth capital is investing: the Scaleup Europe Fund co-led rounds in ICEYE and Mistral AI in 2026. EU Inc is still a proposal without a European Parliament position, and the Public Procurement Act targets agreement by the end of 2027. We call this timing mismatch the Sequencing Gap. It is a risk, not a verdict: foreign capital can help European companies become global leaders; the failure would be companies having to relocate their strategic centre to get it. Our scorecard tests that on a fixed 2026 cohort.

Executive Summary

Europe already measures its startup conditions: the European Commission publishes a Startup and Scaleup Scoreboard with 36 indicators comparing member states. What is not tracked in public is what happens to the same companies over time.

On capital, the Scaleup Europe Fund, managed by EQT, targets about €5 billion; in a dated search on 3 November 2026 we found the European Commission's €1 billion to be the only commitment disclosed by name. The EIB Group's European Tech Champions Initiative 2.0 aims to raise up to €15 billion. Germany's WIN initiative had invested €2.64 billion by the end of 2025 against a goal of €12 billion by 2030.

On the market, the Commission proposed EU Inc on 18 March 2026 and the Council agreed its position on 23 October 2026; the European Parliament had not adopted its position by late October. On demand, the Commission proposed a Public Procurement Act on 9 September 2026. On the evidence, European reference demand can work: ICEYE already delivers sovereign systems for seven European governments. The question is whether that becomes routine.

Key Takeaways

A programme is an input; a company scaling differently is an outcome. The scorecard grades outcomes only.
Targets, commitments and deployment are three different numbers. WIN's €2.64 billion invested by end-2025 is progress against a 2030 goal, not a verdict on pace.
Foreign capital is not the failure mode. Relocation as a condition of getting capital, customers or a listing is.
European reference demand can work. ICEYE delivered an operational capability to Poland less than twelve months after signing; the test is whether this becomes routine across sectors.
We fixed the cohort in advance. Every European company with a €100 million-plus round in 2026, including later failures and relocations.
Forecasts on record: EU Inc not before 1 January 2028 (75%, from Part 6) and, new, not before 1 January 2029 (70%).

FAQ: The Short Answers

What is scale infrastructure?

Scale infrastructure is the set of financial, commercial, institutional and human systems that lets a company grow from product-market fit into a global leader without rebuilding its operating environment at each stage. Startuprad.io measures it with five tests: capital, market, demand, people and retention.

What is the Sequencing Gap?

The Sequencing Gap is the timing mismatch between Europe's scale-up instruments: growth capital is investing from 2026, while the EU company form and procurement reform arrive later. The risk is that some companies financed now still need to relocate their strategic centre to reach the next stage.

How big is the Scaleup Europe Fund?

The fund targets about €5 billion. The European Commission committed €1 billion. In a dated search on 3 November 2026 we found no published total of commitments. EQT manages the fund, which invests in rounds of €100 million and above.

When can startups use EU Inc?

Not yet. The Commission proposed EU Inc on 18 March 2026 and the Council agreed its position on 23 October 2026, including a 21-month implementation period. The European Parliament had not adopted its position by late October 2026. Our forecast: no EU Inc registrations before 1 January 2029.

What does the Public Procurement Act change for startups?

The 9 September 2026 proposal would replace three directives with one regulation, add a European preference, simplify procedures to save buyers time and weight quality criteria, including innovation, at least 30%, subject to comply or explain. Whether deployment actually gets faster is unproven.

How will Startuprad.io measure progress?

We fix a cohort: every company headquartered in Europe that announced a round of €100 million or more in 2026, frozen and published on 31 January 2027. Each November until 2031 we score every company on the five tests and keep failures, acquisitions and relocations in the results.

The Five Tests of The Scale Infrastructure Scorecard

In this scorecard, "Europe" means the EU, the EEA countries, Switzerland and the United Kingdom; "EU" means the 27 member states.

Test 1: Capital

The question: Can a European company raise its next growth rounds, at €100 million and above, without an investor requiring it to move its parent company out of Europe?

What has happened: The Scaleup Europe Fund targets about €5 billion, anchored by €1 billion from the European Commission, and invests in rounds of €100 million and above. Its first investment, announced by EQT on 5 August 2026, co-led ICEYE's €1 billion financing round, which includes €450 million of primary Series F capital at a valuation above €10 billion. On 8 September 2026 Samsung Electronics and the Scaleup Europe Fund co-led Mistral AI's €3 billion Series D. The EIB Group's ETCI 2.0 targets up to €15 billion. KfW reports €2.64 billion invested under WIN by the end of 2025 against a goal of €12 billion by 2030, counting fund, fund-of-funds, direct and debt investments; it publishes no year-by-year schedule.

What it means: Europe now has instruments for very large rounds. Whether they create continuity across several rounds is not yet observable. The ECB puts the total size of venture funds located in the US at about €930 billion against about €150 billion for funds located in the EU, and notes that foreign investors often provide the additional funding EU scale-ups need and may increase the likelihood of relocation.

What we will measure: For each cohort company, every later round, its lead and co-leads, and whether the parent company stayed in Europe.

Test 2: Market

The question: Can a company expand into another European country as a domestic decision rather than a market entry?

What has happened: The Commission proposed EU Inc as a regulation on 18 March 2026: online registration within 48 hours for at most €100, no minimum capital, deferred taxation of employee stock options, and no pan-EU corporate tax regime. The Council agreed its position on 23 October 2026: board-level employee participation follows the registered-office state, the stock-option tax treatment is limited to companies with up to 750 employees and €150 million turnover, and member states get 21 months after entry into force. The European Parliament had not adopted its position by late October 2026.

What it means: EU Inc addresses a company's first day; employment, payroll, local tax and licences stay national. The Council's stock-option limit could exclude larger scale-ups, and the treatment of options granted before a company crosses the threshold needs clarification.

What we will measure: Whether cohort companies operate legal entities or teams in three or more European countries, and how they handle employee equity across them.

Test 3: Demand

The question: Do European companies win repeat European customers, not just pilots?

What has happened: European reference demand can work. According to EQT's announcement, ICEYE delivers end-to-end sovereign systems for seven European governments and delivered an operational sovereign satellite capability to Poland less than twelve months after signing. On 9 September 2026 the Commission proposed a Public Procurement Act: one regulation, a European preference, simplified procedures intended to save buyers time, and a minimum 30% weight for quality criteria, including innovation, subject to comply or explain. The political target is agreement by the end of 2027.

What it means: The proposal contains machinery meant to speed procurement and reward quality; whether it shortens the path from tender to deployment is unproven. In Part 4 of this series we called the problem demand without deployment. ICEYE shows the counterexample; the question for 2031 is whether it becomes routine across sectors.

What we will measure: Announced repeat or framework contracts between cohort companies and European public or industrial buyers.

Test 4: People

The question: Do operators from scaled companies come back as founders, angels and board members in Europe?

What has happened: In Atomico's 2025 founder survey, reported by Sifted, 15% of surveyed founders had moved their headquarters abroad, 57% of them to the United States. The scope of the EU stock-option rule affects how much equity employees of larger companies can build.

What it means: Startups founded and visas issued are inputs. The outcome is experienced people building the next company in Europe.

What we will measure: New companies founded by alumni of cohort companies, and where they are based; baseline in the first scorecard, November 2027.

Test 5: Retention

The question: As a company grows, do its parent company, chief executive, commercial leadership and listing stay in Europe?

What has happened: EY reports that European IPO numbers rose 35% and proceeds 28% in the first three quarters of 2026 compared with 2025. On 9 October 2026 the Council agreed a position that would move supervision of the largest trading venues and post-trade infrastructures to ESMA.

What it means: We score retention as four separate indicators, building on the Capital Gravity Test from Part 6. A US listing alone or a US sales team alone is not a failure. The pattern we look for is several indicators moving out of Europe together while engineering stays.

What we will measure: Parent incorporation, chief executive base, commercial leadership base and listing venue, each scored separately, each year.

What Connects: The Sequencing Gap

Capital is arriving now: the Scaleup Europe Fund has been investing since August 2026 and ETCI 2.0 is raising. The market arrives later: EU Inc has no Parliament position and, in the Council's text, applies 21 months after entry into force. Procurement reform targets agreement by the end of 2027 and must then be applied. Many companies financed by Europe's new growth money will scale, for some years, under today's rules. Some will do it well, as ICEYE shows. The risk is that others will need to move their strategic centre to reach the next round, customer or listing.

Steelman. The strongest objection: capital buys time while reforms catch up, and international investors bring customers, expertise and market access while the company stays European in research, engineering, leadership and tax. We think that is largely right. Foreign capital can help European companies become global leaders. The failure we test for is narrower: companies having to relocate their strategic centre to access it.

Three scenarios for 2031.

Sequenced Europe. EU Inc is agreed in 2027 and usable around 2029 with equity rules that work for larger companies; procurement reform produces repeat contracts; the funds keep investing through a downturn. Most cohort companies pass most tests.
Capital-first Europe. The funds deploy, but market rules stay national in practice, and a meaningful share of cohort companies move parent or leadership abroad to reach the next stage. On today's legislative calendar, this scenario deserves serious weight.
Stall. A downturn arrives before the instruments are complete; institutional investors pull back and legislative files lose priority.

What Would Prove Us Wrong

If most cohort companies pass the retention test under today's rules, before EU Inc and procurement reform apply, the Sequencing Gap was not binding.
If relocations continue after the reforms apply, the problem lies deeper than sequencing, for example in market size or valuations.
If European buyers turn more cohort companies into repeat customers, the demand test passes and our Part 4 diagnosis needs updating.

What Has and Hasn't Been Announced?

Announced and operating: the Scaleup Europe Fund (target about €5 billion; €1 billion from the Commission; investments in ICEYE and Mistral AI); ETCI 2.0 (target up to €15 billion); the European Institutional Investors Pact (launched 22 September 2026, 13 institutions signalling intent); Germany's WIN initiative and the Deutschlandfonds, which adds €1.5 billion over ten years for start-ups, scale-ups and SMEs.

Proposed, not law: EU Inc (Council position agreed, Parliament position pending); the Public Procurement Act (proposed 9 September 2026); the savings and investments union market integration and supervision package (Council position agreed 9 October 2026).

Not disclosed or not yet clear: a published total of commitments to the Scaleup Europe Fund (dated search, 3 November 2026); a pan-EU corporate tax regime for EU Inc (not proposed); the treatment of stock options granted before a company crosses the Council's 750-employee threshold.

Forecasts on Record

From Part 6, unchanged and still open: EU Inc will not apply before 1 January 2028. Confidence: 75%.
New: no company will be able to register as an EU Inc anywhere in the EU before 1 January 2029. Confidence: 70%.
The Scaleup Europe Fund will not publicly confirm total commitments of €5 billion or more before 30 June 2027. Confidence: 65%.
The Public Procurement Act will not be formally adopted before 31 December 2027. Confidence: 65%.
From Part 6, unchanged: by 31 December 2027, at least one Scaleup Europe Fund portfolio company will have a parent holding company outside the EU (a Swiss or British parent counts under this original EU wording). Confidence: 60%.

Previously on this thread. Part 6 introduced Capital Gravity and the first EU Inc forecast; Part 7 introduced the Network Test and restated the forecast. Part 8 adds the scorecard and a second, stricter forecast alongside the first.

What to Watch Next

The European Parliament's vote on its EU Inc position, which must come before any negotiation with the Council.
Our publication of the frozen 2026 cohort on 31 January 2027, and a closing figure for the Scaleup Europe Fund.
Agreement on the Public Procurement Act against its end-2027 target, and the Commission's implementation report on its Startup and Scaleup Strategy, due by the end of 2027.

Operator and Investor Takeaways

If I were a founder raising in 2027, I would ask every lead investor, in writing, whether any future round assumes a change of parent company or listing venue; build an employee equity plan that works across countries today and can migrate later; and choose my first large reference market deliberately. For some companies early US expansion is the right decision; if so, decide in advance which functions and decision rights stay in Europe.

If I were an investor, I would underwrite European growth rounds on the follow-on path, not the single cheque, track the four retention indicators separately for every growth-stage company, and bring European co-investors in early at the €100 million line.

The European Scale-Up Question: All Eight Parts

The full series hub: The European Scale-Up Question. Further reading: Startup Scaling Playbooks for Germany, Austria and Switzerland.

There's More to This Story

There is more to this story

For Entrepreneurs Vault members, I go one level deeper: the cohort rules and the full Scale Infrastructure Scorecard as a working tool, with a watchlist of ten indicators, their current values and the thresholds that would change our view.

We look at why targets, commitments and deployment are three different numbers, and what that means for founders planning a large round in 2027. Members get the term-sheet questions on corporate geography and the investor diligence list.

The full Entrepreneurs Vault analysis is available to members.

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Go deeper with the Entrepreneurs Vault

The public episode gives you the story. Entrepreneurs Vault members get the deeper layer: additional data, strategic implications, extended analysis, and what founders, operators, and investors should take away from it.

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About the Author

Jörn "Joe" Menninger is the founder and host of Startuprad.io, based in Frankfurt am Main. Since 2014 he has covered startups and venture capital across Europe, with a focus on Germany, Austria and Switzerland, with 1,700+ podcast episodes across the franchise. Before Startuprad.io he spent more than 15 years in management consulting. LinkedIn

Automated Transcript

This transcript was generated automatically from the episode audio and lightly corrected. It may contain errors; the audio and video are the authoritative record.

Joe Menninger [00:00:00]: Europe has a scale-up fund with a €5 billion target. The European Commission has put in €1 billion, and that is the only commitment we could find disclosed by name. Europe has a new company for startups. It is still a proposal, and the European Parliament has not yet voted on it. Europe has a new rulebook for public buyers. The target for finishing the negotiations is end Europe is adding growth capital faster than it is removing the barriers to scaling. The question for 2031 is whether its best companies can grow globally without having to move their strategic center out of Europe. This is Startuprad.io, your startup podcast and YouTube channel on startups and venture capital in Europe with focus on Germany, Austria, and Switzerland.

Joe Menninger [00:01:07]: Hello and welcome everybody, my name is Joe. I am coming to you from Frankfurt am Main, Germany, and this is part number 8 of our series, The European Scale-Up Question or The European Scale-Up Gap. For 7 episodes, we diagnosed the problem Today we ask what would actually have to change between, say, 2027— we're very close to it— and 2031 for Europe to produce more globally scaled technology companies. And we write down how we will check. It's 2 years after the Draghi report. The Joint European Disruptive Initiative tracked the follow-through. According to its Draghi Tracker, about a quarter the recommendations have been implemented. Europe does measure its startup conditions.

Joe Menninger [00:01:55]: The European Commission publishes a Startup and Scale-Up Scoreboard with 36 indicators comparing member states. What nobody tracks in public is the outcome for the same companies over time— which ones scaled, which ones moved, and which ones failed. This is the gap. This episode tries to fill. So today I separate 3 things: policy announcement— what governments and institutions say they will do— infrastructure changes— what actually alters the conditions under which companies scale— and observable outcomes— what founders, investors, and customers then do differently. Most of the debate is about the first This episode is more about the third. So here's my thesis in one breath: Europe is adding growth capital faster than it's removing some of the barriers to scale. This creates a risk— companies may still need to relocate to grow.

Joe Menninger [00:03:03]: Our scorecard will test whether they can scale globally while keeping their strategic center in Europe, and it will reward the cases that prove us wrong. I call the timing mismatch the sequencing gap. A new program is an input. A company scaling differently is an outcome. This episode rates Europe on outcomes. Where we are in the argument: Part 1 defines the scale-up gap in our overall series. I mean, Part 2 called fragmentation a hidden growth tax. Part 3 of our scale-up series showed a capital architecture breaks between the rounds.

Joe Menninger [00:03:45]: Part 4 was demand that does not turn into deployment. Part 5 was talent that does not recycle. Part 6 introduced capital gravity, and Part 7 showed that Europe's strongest hubs do not add up to one market. In Parts 6 and 7, we We put a forecast on record. The EU Inc. will not apply before January 1st, 2028, at 75% confidence. That forecast stays still on record and we'll score it on that date. Well, maybe a few days later because, you know, New Year's.

Joe Menninger [00:04:28]: Anyway, today I add a second stricter one. Defining scale infrastructure. First, a definition, because we will use this from now on. Scale infrastructure is the set of financial, commercial, institutional, and human systems that lets a company grow from product-market fit into global leader without rebuilding its operating environment every time it grows. Startup Radio's way to measure it is the the Scale Infrastructure Scorecard. It has 5 tests, and each test asks about companies' behavior, not government announcements. Number 1, capital. Can a company raise its next growth round without having to move its parent company? The market.

Joe Menninger [00:05:23]: Can they expand into another European country as a domestic decision. Demand— can it win repeat European customers, not just pilots? People— do its operators come back as founders and angels? Retention— as it grows, do its parent company, its leadership, and its listing stay in Europe? And here is how we keep it honest. We do not pick like the best 50 companies in 2031. That would, uh, kind of select the answer. We fix the group now. Our cohort is every company headquartered in Europe that announced funding of €100 million or more in calendar year 2026. We freeze that list at the end of January 2027. And publish it.

Joe Menninger [00:06:23]: Every company stays in the cohort, including the ones that fail, get acquired, or relocate. Each year we score every company on the 5 tests and we publish results, including the cases that contradict us. Before I make my case, the strongest opposing argument, it goes something like this: capital buys time. Europe's reforms are slow, so the best thing a growth fund can do is keep good companies funded until the rules catch up. And international investors are not a threat. A strategic investor can bring customers and supply chain. An American fund can bring expertise and access to the largest market in the world. A company can take that money, list in New York, hire commercial team in California, and still be a European company in every way that matters— research, engineering, leadership, tax.

Joe Menninger [00:07:22]: I think that argument is largely right, and I want to say so clearly. Foreign capital can help European companies become global leaders. So the risk I'm casting is narrower. The failure is not foreign money, as I said before. The failure is a company having to relocate its strategic center in order to get the money, the customers, or the listing it needs. The European Central Bank names that risk. It says foreign investors often provide the additional funding European scale-ups need and that they may increase the likelihood of headquarters relocating. May is the important word.

Joe Menninger [00:08:08]: Whether it happens is exactly what our scorecard measures. Test number 1, capital. Can Europe finance its winners? What happened? The Scale-Up Europe Fund targets about €5 billion. The European Commission committed €1 billion. EQT manages it. It invests in rounds of €100 million and above. In August, it co-led ICEYE's €1 billion financing round, which includes €450 million of primary Series F capital and a valuation above €10 billion. In September, Samsung Electronics and the Scale-Up Fund Europe co-led Mistral AI's €3 billion Series D.

Joe Menninger [00:08:57]: On the 10th of July, the EIB Group announced the European Tech Champion Initiative 2.0. With a fundraising target of up to €15 billion. And on the 22nd of September, the Commission and the EIB launched an Institutional Investor Pact with 13 institutions saying they intend to invest in Germany. KfW reported that €2.64 billion had been invested under the WIN initiative at the end of 2025 against a goal of €12 billion by 2030. KfW counts investment through funds, funds of funds, direct investments, and debt such as venture debt. There is no published year-by-year schedule, so that figure tells us progress, not whether the WIN initiative is on pace. Why it matters structurally. There are 3 different numbers in every headline about the European Growth Capital: a target, is what a program aims for.

Joe Menninger [00:10:02]: A commitment is money promised, and deployment is money in a company. On the Scale-Up Europe fund, we searched on November 3rd the EIC fund page, EQT's announcement, the EIB, the track price. We found no published total of commitments beyond the Commission's €1 billion. That is a disclosure gap. It is not proof that the money is missing, but a public fund should publish its closing figure, and we will report if it ever does so. The capital test is one question: can a European company raise its next growth round at €100 million plus without investors requiring it to move its parent company out of Europe? Not one big round— round after round until the answer My answer is routinely yes. Europe has growth funds, but it does not yet have capital continuity. What would change my mind? If, say, by 2028, most cohort companies that raise again do so with a European lead or co-lead and without changing their parent company, the capital test is passing.

Joe Menninger [00:11:17]: Whether the headline Fund sizes say. If instead redomiciliation clauses— so moving headquarters clauses— start appearing in term sheets as a condition of the next round, the risk is real. What I will measure for every company in 2026 cohort, each later round, who led it and whether the parent company stays where it is. Test number 2, market. Can Europe behave like a home market? What happened? On the 18th of March 2026, the Commission proposed EU Inc., the so-called 28th regime, as a regulation. Online registration within 48 hours at a maximum cost of €100, with no minimum capital and a European employee stock option rule that defers taxes until shares are sold. It does not include a pan-European corporate tax regime. On the 23rd of October, the member states agreed to the Council's negotiation position.

Joe Menninger [00:12:29]: Registration in 2 days for 100 euros survives. Board-level employee participation follows the rule of the country where the company has its registered office. The Council limits the stock option tax treatment to companies up to 750 employees and €150 million in turnover, and it sets a 21-month implementation period after the regulation enters into force. The European Parliament had not adopted its position by late October. Reports say the Legal Affairs Committee vote was postponed twice in October over employee participation. Negotiations with the Council cannot start until Parliament has voted. Why it matters structurally: EU Inc. fixes the first day of company's life.

Joe Menninger [00:13:21]: Much of the cost of fragmentation comes later: employment law, payroll, local tax, sector licenses. Those stay national. On the stock options, the Council's limit could exclude larger scale-ups. What happens to options granted before company crosses that line is not yet clear, and that needs to be clarified before founders can plan around it. Here's my own arithmetic on the timeline, and it is an estimate, of course, not a fact. If Parliament votes in the coming weeks, negotiations with the Council run into 2027. After the agreement comes formal adoption, publication, and entry into force. Add the Council's 21 months and the first registration lands somewhere in 2029.

Joe Menninger [00:14:15]: That is where my forecasts later in this episode comes from. What people get wrong: they treat EU Inc. as the market test. It is the entry ticket. Market test is whether a company in Munich can hire in Lisbon, sell to Warsaw, and grant equity in Vienna without rebuilding its legal setup each single time. Before the demand test, which is whether evidence is more encouraging than people think, a quick word from our partners. Startup Radio is founded by partners not by advertising networks. If your firm wants to reach founders, investors, and operators across Europe with a focus on the DACH region, look at celebrate.io/become-a-partner.

Joe Menninger [00:15:08]: And stay with me because after the demand test, I will give you a forecast you can hold me to. Test number 3, demand. Will you buy what it builds? And here I want to start with a counterexample to my own series. Yes, I know. In part 4, we called it demand without deployment. Public money funds the supply of innovation, but the public buyer does not become the customer. Now look at ICEYE. According to EQT's announcement, ICEYE already delivers sovereign satellite systems for 7 European governments, and it's delivered an operational capability to Poland less than 12 months after the contract was signed.

Joe Menninger [00:15:55]: ICEYE shows that European reference demand can work. A European company won European governments as customers and delivered it under a year. The question for 2031 is not whether this is possible, it is whether it becomes routine across sectors for companies that are not already leaders. Count the repeat contracts, not the pilots. A pilot tells you a buyer is curious. A repeat contract tells you a buyer depends on you. What happened to the rules? On the 9th of September 2026, the Commission proposed the Public Procurement Act, one directly applicable regulation instead of 3 directives: a European preference in awarding contracts, simplified procurements that the Commission says will save public buyers time, and a minimum 30% weight for quality criteria, innovation among them, subject to the comply or explain rule. The political target is to conclude negotiations by the end of 2027.

Joe Menninger [00:17:12]: So why does this matter structurally? The proposal does contain machinery meant to make procurement faster and reward quality. What is unproven is whether it will. Comply or explain lets a buyer opt out with a reason. Simpler procedures save time on paper. The test is the time from tender to deployment in practice. What I will measure: for the cohort, announced European public or industrial contracts and how many are repeat or framework contracts. At the system level, time from tender to operational deployment where buyers publish it. Test number 4, people and experience compound.

Joe Menninger [00:18:00]: In part 5 of the series that We argued that Europe produces talent, but scaling experience does not recycle fast enough, meaning employees who once scaled go back into companies that are scaling. The operator who took a company from 100 to 1,000 people should become the angel, the founder, or the board member of the next companies. 2 signals matter. First, employee ownership. Equity that employees build is what can turn operators into angels, which is why the scope of the EU stock option rule matters. Second, where founders and operators base themselves. Atomicos' 2025 Founder Survey found that 15% of surveyed founders had moved their headquarters abroad, and 57% of those had moved to the United States. What people are getting wrong here— they count startups founded and visas issued.

Joe Menninger [00:19:04]: Those are inputs. The outcome is experienced people building the next company in Europe. What it will measure for the cohort: new companies founded by alumni of cohort companies and where those new companies are based. The baseline goes into the first annual scorecard in November 2027. Test number 5, retention. Do the winners stay? This is capital gravity turned into a scorecard line, and I want to be precise about it. Some good news first. EY reports that European IPO numbers rose 35% and proceeds 28% in the first 3 quarters of 2026 compared with the previous year.

Joe Menninger [00:19:50]: On the 8th of October, the council agreed a position agreed-to position that would move supervision of largest trading venues and post-trade infrastructure to the European Securities Regulator, ESMA. Now the position— we score retention as 4 separate indicators, not simply one. Where's the parent company incorporated? Where does the chief executive work? Where is senior commercial leadership based? And where is the company listed or expected to list? A US listing alone is not a failure. A US sales team alone is not a failure. What we look for is the pattern— several of those moving out of Europe while the engineering stays. And remember the definition: a parent company in Zurich or London counts as European in our scorecard. The sequencing gap. Now put the 5 tests on a timeline.

Joe Menninger [00:20:55]: Capital arriving now. The Scale of Europe Fund has been investing since August 2026. ETCI 2.0 is fundraising. The market arrives later. EU Inc. is not law. Parliament has not voted and the Council's text gives member states 21 months after the entry into force. Procurement reforms arrive later still.

Joe Menninger [00:21:22]: Agreement is targeted for the end of 2027, and then it has to be applied. So many companies financed by Europe's new growth money will scale for some years under today's rule. Some will do it very well, as ICEYE shows. The risk is that others will need to move their strategic center to get the next round— the customers or the listing. That is the sequencing gap. It is a risk to test, not a verdict. 3 scenarios for 2031. Scenario number 1: Sequence Europe.

Joe Menninger [00:22:03]: EU Inc. is agreed in '27. and becomes usable in '29 with employee equity that still works for larger companies. The procurement act is agreed and buyers start running repeat contracts with young companies. The growth funds reach their targets and keep investing through a downturn. In that world, most cohort companies pass most tests. Another scenario, scenario number 2. Capital First Europe, the funds deploy, but market rules stays national in practice.

Joe Menninger [00:22:38]: Europe gets more large rounds, and a meaningful share of cohort companies move their parent company or leadership abroad to reach the next stage. The capital test improves, the retention test does not. And on today's legislative calendar, I think this scenario deserves some serious weight. Scenario number 3, stall. A downturn arrives before the instruments are completed. Institutional investors pull back, targets slip, and legislative piles lose priority. What separates scenario 1 from number 2 is timing. The decision about where a parent company sits often comes around the later growth rounds or before an IPO.

Joe Menninger [00:23:26]: For companies raising large rounds in '27 or '26, that is roughly '28 to 2030. The window is real and is narrow. What would prove us wrong? Every thesis in this series should be falsifiable. So here's what would prove This one wrong. First, most cohort companies pass retention tests under today's rules. Before EU Inc. and procurement reforms apply, then the sequencing gap was not binding. Capital was enough, and I will say so on the show.

Joe Menninger [00:24:09]: Second, if the cohort shows relocations even after reforms are in place, then the problem was never the order of the instruments. It was something deeper, like market size or valuation, and the next part of this series will have to go there. Third, if European public and industrial buyers turn more cohort companies into repeat customers, as ICEYE shows is possible, the demand test passes and part 4 of this series Needs an update. That would be actually a good problem to have. Milestones we'll be watching, '27 to 2031. The milestones I will track, in order: next European Parliament's vote on EU Inc. Until that happens, nothing can be negotiated. January '27, we freeze and publish the 2026 cohort.

Joe Menninger [00:25:10]: In '27, Whatever the scale-up your fund publishes as a closing figure and whether ETCI 2.0 confirms the size of its first closing. By the end of '27? Whether the Public Procurement Act and the Savings and Investment Union supervision package are agreed, as the political targets say. The Commission is also due to report on its startup and scale-up strategy By the end of '27. November '27, 12 months out, the first annual scorecard for the cohort, then every November until 2031. Forecast. Here's my forecast on record. No company will be able to register as an EU Inc. anywhere in the European Union before January 1st, 2029.

Joe Menninger [00:26:05]: My confidence is 70%. The reason is simply the calendar. As of late October 26th, the European Parliament had not adopted its position, and negotiations with the member states cannot start until it does. This sits next to our earlier forecast, not instead of it. The Part 6 forecast, no EU Inc. before January 1st, 2028, at 75% stays on record. And it will be scored on that date. 2 more predictions.

Joe Menninger [00:26:39]: First, the Scale-Up Europe Fund will not publicly confirm that commitments of €5 billion or more before June 30th, 2027. Confidence 65%. Second, the Public Procurement Act will not be formally adopted before end of '27. Confidence 65%. And our part 6 forecast stays open as originally worded. By the end of '27, at least one scale-up fund Europe portfolio company will have a parent holding company outside of the EU. Note that this one is about the EU, so a Swiss or British parent would count. Still 60%.

Joe Menninger [00:27:27]: Our synthesis. So what connects all of this? Europe's instruments are no longer missing. Their timing is uneven and their effect is unproven. Each test depends on the others. Growth capital helps most when the company can also hire, sell, and grant equity across Europe, and when European buyers become repeat customers. The game changes when the 5 tests turn green for the same companies at the same time. And if the cohort shows that companies scale globally and keep their strategic center in Europe under today's rules, we will say so. Operator and investor split.

Joe Menninger [00:28:11]: If I were fundraising in '27, I would do 3 things. I would plan my next growth rounds as a sequence and ask every lead investor in writing whether any future round assumes a change of parent company or listing venue. I would build an employee equity plan that works today across countries and can migrate later rather than waiting for EU Inc. And I would decide deliberately where my first large reference customer comes from. For some companies, early US expansion is right commercial decision. If you go to the US first, decide in advance which functions and which decision rights stay in Europe. If I were an investor, I would underwrite European growth rounds on the follow-on path, not the single check. I would track the full retention indicators for early growth stage companies separately, and I would treat the €100 million line as the point where your co-investors are now present and worth bringing in early.

Joe Menninger [00:29:22]: There's more to the story for Entrepreneur World members. I go one level deeper— the cohort rules and the full scorecard as a working tool with a watchlist of 10 indicators, the current value of each, and the threshold that would change my views. We look at why targets, commitments, and deployment are 3 different numbers and what that means for founders planning a large round in '27. Members also get the term sheet question on corporate geography and the investor diligence list. The full Entrepreneur's Vault analysis is available to members on YouTube and Substack. The links are in the description. Thank you for listening to part 8 of the European Scale-Up Question. The single idea to take you— to take with you A program is an input.

Joe Menninger [00:30:12]: A company scaling differently is an outcome. We have fixed the cohort rules today, so we cannot choose the answer later. We'll come back to this every November until 2031. If this was useful, send it to one founder who is planning a large round next year. Rate and review the show wherever you are listening, and If you know a case that proves this thesis wrong, very happy, send it to us. The Entrepreneur's World Edition goes live on Saturday at 10 in the morning. All 8 parts of the series are linked in the show notes. This was Startup Radio.

Joe Menninger [00:30:51]: My name is Joe. Take care and see you next time. Bye.

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