EU Capital Markets Reform Should Focus on Innovation Investment

Why It Matters

Closing the scale‑up financing gap is critical for Europe’s competitiveness and strategic autonomy, ensuring high‑growth firms can scale domestically rather than exiting abroad.

Key Takeaways

• Scale‑up financing in EU is less than 10% US level
• Germany and France host 74 and 50 EU unicorns
• Cross‑border custodial barriers raise transaction costs
• EURIPO would create a unified EU IPO market
• EIB can de‑risk private investment without new fiscal powers

Pulse Analysis

Europe’s venture‑capital ecosystem remains fragmented, leaving innovative firms without the deep‑pocket financing needed to transition from start‑up to market leader. While Germany and France dominate the regional landscape, peripheral economies lag far behind, and the overall VC supply to scale‑ups is a fraction of that in the United States. This disparity drives a persistent “scale‑up gap,” forcing many high‑potential firms to seek exits abroad, often through dollar‑denominated IPOs or acquisitions, which siphons talent and capital away from the EU.

The Bocconi report outlines six concrete steps designed to unlock dormant household savings and redirect them toward risk‑bearing assets. Introducing EU‑labelled savings accounts and modern private‑pension products would provide low‑friction, tax‑advantaged channels for retail investors to support innovative firms. Simultaneously, the EURIPO framework promises a pan‑European listing environment, reducing the regulatory and cost barriers that currently make U.S. markets more attractive for late‑stage financing. By harmonising custodial services and leveraging distributed‑ledger technology, the proposals also aim to cut post‑trading fragmentation that hampers liquidity.

An expanded role for the European Investment Bank ties the reforms together, offering balance‑sheet capacity to de‑risk private capital and act as an anchor investor in a new securitisation platform. This market‑making approach would free banks’ balance sheets, generate long‑duration assets for institutional investors, and create a virtuous cycle of capital availability. If implemented, these incremental yet coordinated measures could narrow the financing gap, retain more scale‑ups within Europe, and strengthen the bloc’s strategic autonomy in a competitive global economy.