Innovation and technology have moved beyond economics—they are now domains of geopolitics. With conflict on Europe’s doorstep and growing uncertainty in transatlantic alliances, the EU has realised the urgency of greater autonomy.

Europe has learned the hard way that creating startups is not enough — having sustainable, innovative companies is a matter of sovereignty. Despite matching the U.S. in startup creation, too many European innovators relocate or are acquired by Big Tech before reaching their potential. Fragmented rules, shallow capital markets, and 27 national systems stand in the way. As over 60% of successful startups are bought by non-EU firms, Europe risks losing control over critical technologies.

Critically, even the startups that are not outright acquired by dominant US players end up orbiting around Big Tech-centric tech ecosystems. Critical assets, such as cloud computing, digital platforms and AI LLMs, are digital infrastructure that is necessary for the operation or distribution of digital products and services. These assets enable US hyperscalers to deploy extractive business models at the expense of European innovators, who have no choice but to orbit at the periphery of their ecosystems.

Against this backdrop, the EU Startup and Scaleup Strategy, published by the European Commission today, affirms the ambition of making the continent the most attractive place for innovators to launch and scale their businesses. But it overlooks a key structural issue: the lack of homegrown digital infrastructure. Without addressing Europe’s dependence on non-EU hyperscalers, startups risk being locked into foreign tech ecosystems—undermining the very sovereignty the Strategy seeks to promote.

The Strategy´s long-term vision is strong- supporting companies from early stage through to full-scale growth, but it should be complemented with a plan to leverage established European companies and public-private partnerships to provide an infrastructure for start-ups to deploy their innovative solutions.

While past EU efforts focused heavily on startups through grants, mentoring, and networking, this Strategy zeroes in on the scale-up phase, where access to capital, markets, and flexible regulation becomes important. This is a step towards a more entrepreneurial economy, placing startups and scaleups at the heart of the EU’s competitiveness agenda. It’s a welcome political shift: innovative ecosystems are no longer treated as a niche concern, but as central to Europe’s economic future and sovereignty.

In fact, the European Commission recognises that when innovative firms with high potential leave or are acquired by foreign players, Europe loses control of critical technologies. The Strategy crucially acknowledges the need for the European industry to retain home grown innovation on our continent to preserve Europe’s competitiveness and autonomy. However, the deliverables of the Strategy should be better defined with the sovereignty lens: the Europe Scaleup Fund, measures aimed at boosting demand for European tech and at closing the skills gap, all need to contribute to the overarching objective of Europe’s sovereign tech ecosystem.

In addition, the Strategy rightly identifies the reform of public procurement as a window of opportunity to make tenders more accessible to startups – but the most critical measure to include in the review of public procurement mechanisms is a clear definition of European preference criteria to prioritise tech innovation produced in the continent, in particular by European SMEs and start-ups. This approach should not be limited only to the areas of security and defence, as hinted in the Strategy, but should fully include the digital sector and technologies. This is the only way to design a mission-oriented public procurement framework, boosting demand, and in turn fostering access to capital by European companies innovating on domestic, advanced tech products and services.

On skills and talent, the strategy introduces the Blue Carpet Initiative, which aims to ease the recruitment of highly skilled professionals from both within and outside the EU. The initiative includes support for entrepreneurial education, streamlined visa procedures, and proposals to harmonise the taxation of employee stock options. Steps that could help small firms attract the talent they need to grow.

The proposed 28th regime, a unified legal framework open to innovative companies and based on digital-by-default solutions, could significantly reduce regulatory fragmentation across Member States. If executed effectively, it would streamline cross-border operations and lower the compliance burden not only for start-ups but also for digital SMEs that frequently operate in more than one jurisdiction.

While nurturing a next generation of European unicorns, the EU should build on best-in-class companies: from chips to cloud services, from connectivity to AI. Europe can leverage its existing industrial assets to develop its own new technologies.

Besides boosting demand for EU tech, and accelerating access to markets for innovative companies within the Single Market, the European Commission should promote a collaborative approach among European innovators, as the EuroStack [1] initiative suggests, to rewire the European digital landscape.

[1]  https://www.digitalsme.eu/tech-sovereignty-and-eurostack/