Atlas #2: EU-INC and the Case for Europe’s Next Phase of Venture

TenNine Atlas — Vol. 02

1. EU-INC: Why?

Every time a European founder reincorporates in Delaware, it is not a vote against Europe. It is a vote against complexity. EU-INC is the first pan-European initiative that takes that seriously.

Despite the single market theory, European venture capital still operates largely within national borders (Orrick, 2024; Forbes, 2025). Early-stage capital remains fragmented across 27 corporate systems, each with its own incorporation rules, shareholder frameworks, and legal requirements. For companies raising small or mid-sized rounds, this fragmentation is not an abstraction. It is a cost.

It also compresses returns by adding avoidable legal and administrative friction before companies have even reached meaningful scale. Fewer than 18% of early-stage venture investments in Europe are cross border. Even when founders, technology, and customers are European by design, capital is still raised locally first, and only later syndicated internationally, if at all.

This has practical consequences. For angels and early venture funds, legal complexity often outweighs cheque size. Cross-border rounds introduce jurisdictional risk, duplicated documentation, and transaction costs that are hard to justify at the pre-seed and seed stage (Forbes, 2025).

For companies that do scale, the response has been predictable. Many of Europe’s most ambitious startups re-incorporate outside the EU, most commonly in the United States. Delaware has become the default destination not because European founders lack commitment to Europe, but because the corporate infrastructure is simpler, more predictable, and better aligned with how venture capital operates at scale.

This pattern has been acknowledged at the highest levels of European economic policy. As Mario Draghi has noted in the context of European competitiveness, fragmented capital markets do not just slow growth, they redirect it (Impact Europe, 2025). What matters now is that this pattern is no longer being accepted as inevitable.

EU-INC targets this bottleneck directly. By offering a single, optional corporate framework designed for cross-border operation from the outset, it addresses the structural reason early European capital struggles to flow freely. It does not attempt to replace national systems. It creates an alternative for companies and investors that already operate beyond them. In doing so, EU-INC focuses on a narrow but critical problem: making European capital easier to deploy across borders (Orrick, 2024; Forbes, 2025).

2. What EU-INC Changes

EU-INC does not try to redesign Europe’s venture ecosystem. It removes specific points of friction that make capital harder to deploy than it needs to be. Three mechanisms matter most from an investor’s perspective.

One legal interface instead of 27

EU-INC introduces a single, optional corporate regime that companies can choose at incorporation. For investors, this means one familiar rulebook rather than navigating national company laws each time capital crosses a border. It reduces jurisdictional uncertainty and makes early cross-border rounds easier to structure without bespoke legal work for each country involved (EU-INC Policy Proposal, 2025). The value here is not only legal novelty, but predictability.

One investment standard for terms and transactions

Through the EU-FAST framework, EU-INC aims to standardise core investment documentation for early-stage rounds. This matters because documentation friction is one of the quiet blockers of cross border capital. When terms, rights, and governance expectations are aligned, syndication becomes easier and follow-on rounds faster (EU-INC Policy Proposal, 2025). For investors, this lowers transaction costs and reduces the risk of misalignment between early and later capital.

One source of truth for ownership and control

EU-INC also proposes a central European registry that provides a clear view of ownership, governance, and control. Instead of relying on fragmented national filings, investors can verify cap tables, shareholder rights, and corporate changes in one place. This reduces diligence friction, improves transparency, and lowers operational risk, particularly as companies scale and shareholder bases grow.

Taken together, these mechanisms do not promise faster growth. They increase the probability that growth, once achieved, can be sustained across Europe.

For investors, the relevance is straightforward: fewer structural surprises, easier syndication, and lower friction across the full lifecycle of an investment. EU-INC does not change what makes a company good. It changes how efficiently capital can support the ones that are (Orrick, 2024; Forbes, 2025).

3. Why This Matters Now

Political alignment around capital markets and competitiveness is recently stronger than usual. The direction of travel is consistent across recent work led by Enrico Letta, Mario Draghi, and the European Commission. While these initiatives differ in scope, they converge on a shared diagnosis: fragmented capital markets are now a structural liability for Europe’s competitiveness (Impact Europe, 2025).

This is no longer a niche venture concern. It is framed as a macroeconomic issue.

Germany has now put that view on paper. In its 2026 assessment, the Expert Commission on Research and Innovation (EFI) argues that internal market fragmentation directly reduces the return expectations of investing in European companies and leaves European start-ups at a disadvantage versus the U.S. and China.

It explicitly backs a “28th regime” as the mechanism to overcome the patchwork of national rules, and recommends implementation via an EU Regulation (not a Directive) to avoid divergent national transpositions. If unanimous progress stalls, EFI urges pursuing a “coalition of the willing”, including the option of an initial Franco-German harmonisation track that others can later join (EFI Gutachten, 2026).

Crucially, EU-INC is not positioned as a long-term aspiration without a delivery path. A legislative timeline exists, with pilot and implementation phases expected between 2026 and 2027 (EFI Gutachten, 2026; Forbes, 2025). That places it within the planning horizon of current fund lifecycles, not some distant policy cycle.

Support is also emerging from the market side. Founders building cross-border, capital-intensive companies have been among the strongest advocates, alongside venture funds that already operate pan European strategies (Forbes, 2025). For these groups, EU-INC does not create new ambition. It removes friction they already navigate daily.

This matters because institutional infrastructure is rarely built during periods of exuberance. It is built in the quieter phases between cycles, when the focus shifts from growth at any cost to durability and execution.

That is where Europe is now.

This shift is already visible in where capital is concentrating; climate infrastructure, industrial automation, energy systems, and regulated AI (Impact Europe, 2025). These are not speculative markets. They are large, durable, and increasingly aligned with European policy, procurement, and long-term demand.

Capital is more selective. Public funding is more targeted. Procurement is increasingly used as an industrial tool rather than a subsidy. EU-INC fits this phase. It prepares the ground for the next expansion by reducing structural drag before capital accelerates again.

For investors, the implication is straightforward. This is not a policy reacting to a boom. It is infrastructure being laid in advance of the next one. Like any institutional reform, its impact will depend on adoption and execution (Impact Europe, 2025).

4. What Kind of Europe This Creates

EU-INC signals something larger than a technical reform.

Europe is not trying to replicate Silicon Valley. It is not optimising for speed at all costs, nor for experimentation untethered from institutions. Instead, it is shaping an ecosystem designed for a different kind of scale.

One built around long-term capital rather than rapid turnover.

One that works within regulated markets rather than around them.

One capable of supporting industrial, climate, and infrastructure technologies that require time, credibility, and durability to succeed (Impact Europe, 2025).

This is a Europe where venture capital is increasingly connected to procurement, public markets, and long-term industrial demand. Where growth is measured not only by velocity, but by staying power. And where capital compounds through execution, not just early momentum.

EU-INC does not create this ecosystem on its own. But it makes it legible (EU-INC Policy Proposal, 2025).

By reducing fragmentation and aligning corporate structure with how capital and technology already move, it lowers the friction that has historically pushed Europe’s most ambitious companies elsewhere. It gives investors a clearer interface with a market that has often been structurally sound, but operationally complex (Orrick, 2024; Forbes, 2025).

This is not about producing more startups. It is about creating conditions in which long-term capital can deploy with confidence, and remain in Europe as those companies scale.

EU-INC does not guarantee that European deep tech capital stays in Europe. But it removes the most persistent structural reason it leaves. For investors already tracking European ecosystems, that shift matters, not as a distant policy outcome, but as a change in the operating conditions for every investment decision made between now and the end of the decade.

TenNine Compass is our ongoing effort to map where those conditions are most favourable. EU-INC is the policy backdrop. The ecosystems are where the opportunity becomes concrete. We start with the Netherlands, and we are just getting started.

Follow us on LinkedIn for more ecosystems.

TenNine Atlas

TenNine Atlas is a research series examining European deep tech ecosystems through several structural dimensions: research infrastructure and IP formation, deep tech’s share of venture capital, industrial anchors and sector depth, capital timing and exit dynamics, and the institutional capital and policy frameworks supporting long-cycle innovation.

Sources

Market and Founder Perspectives Forbes / Jessica Mendoza — How a New Pan-European Legal Entity Could Transform Startup Funding, November 2025

Policy and Regulatory Frameworks EU-INC Initiative — Policy Proposal: An Industry Blueprint for the 28th Regime, 2025 | European Commission — Competitiveness Compass and Startup & Scaleup Strategy, 2025 | European Parliament — JURI Committee Legislative Initiative Report (2025/2079), December 2025 | Impact Europe — Rewind: EU-INC, The Road to a 28th Regime, 2025

Research and Expert Analysis Expertenkommission Forschung und Innovation (EFI) — Gutachten 2026, Section A4: Ein 28. Regime für den europäischen Binnenmarkt | Orrick — EU-INC: A Vision for a Unified European Corporate Structure, November 2024