One year on from Draghi report: Europe’s innovation future hangs on the 28th Regime

It's hard to believe that this time last year, I was sitting in a shopping mall (waiting for a flight),  reading the  Draghi report, a European Union report about the future of European competitiveness authored by Mario Draghi, former Italian prime minister and president of the European Central Bank.

The nearly 400-page report, a year in the making, featured over 170 recommendations, citing chronic underinvestment, both public and private, a talent drain, and excessive overregulation and bureaucracy that block startup growth.  "USA innovates, China replicates, the EU regulates" is Europe's badge of shame. 

Now, just one year after the Draghi report, EU–INC is calling on policymakers to match that ambition with action. And we at Tech.eu, are in complete support. 

An ambitious plan for transformative change by our startup ecosystem

Backed by over 16,000 founders, CEOs and investors — including leaders from DeepL, GetYourGuide, Index Ventures, Mistral, Revolut, Stripe, Supercell and Wise — EU–INC is urging the European Commission and Member States to deliver a bold, unified legal framework that allows startups to launch, raise capital, attract talent and scale seamlessly across borders.

At the heart of this effort is the proposed '28th regime', a new EU-wide legal entity. While the Commission is expected to publish its proposal by Q1 2026, early feedback from the startup community warns that current drafts risk delivering only superficial reform. 

Check out our plain language guide to the 28th Regime.

Four bold reforms to build a founder-first 28th Regime

EU–INC has outlined four priorities critical to delivering a founder-first 28th regime:

• Establish a new EU-level corporate form, not a patchwork of national 28th regime variants: A single, EU-wide company structure with uniform rules on governance, share capital and maintenance, enabling truly standardised investment across all Member States.
•  Launch a digital registry & dashboard (EU-REGISTRY & EU-DASHBOARD): A fully online incorporation process and management portal at the European level, designed for 48-hour setup and seamless third-party integration.
• Provide a turnkey investment tool (EU-FAST): An open-source, standardised instrument inspired by SAFEs and BSA AIRs, streamlining early-stage funding so founders can send a single, investor-ready document worldwide.
• Roll out a pan-European ESOP framework (EU-ESOP): A unified approach to employee stock options, defining eligible share types, safe-harbour valuation and benefit treatment, to attract and retain top talent across borders.

Andreas Klinger, Founding Partner of Prototype and one of the founders of EU–INC, commented: 

"We need the next generation of startups to reshape our economy. But startups need scale. Large pools of early investors, competitive fast financing rounds, the best possible angel and supporters.

No country in Europe alone is large enough to provide a competitive scale against the US. This is a European problem, requiring a pan-European solution."

According to  Arthur Mensch, co-founder and CEO of Mistral:

"Europe is making progress on the Draghi report – but that ambition will only count if the European Commission and national governments match it.

Member States shall urge the Commission to champion an ambitious yet simple "28th regime", and allow companies to operate under a single set of rules, or we risk losing another generation of European innovators." 

According to Henrik Landgren, Co-Founder and CPTO of Gilion, Europe's competitive challenge is rooted in how we connect available capital with companies that need it. 

"Europe faces an €800 billion annual investment gap despite having more capital available than the US — the problem is our financial markets are less efficient at deploying it. 

Despite considerable EU rhetoric about ecosystem investment and improvement, we still see large funding projects without clear deadlines and application processes that take years to complete."

Landgen cautions that Draghi's warning that without coordinated industrial policy and rapid decision-making, Europe would face 'slow agony' in keeping pace with the US and China, appears to be coming true:

"Many European champions like Klarna continue to choose New York over European exchanges for their IPOs, part of a broader pattern of companies looking across the pond for the speed and efficiency our own capital markets struggle to provide. 

Without a more efficient conductor between abundant capital and promising companies, we risk watching European startups migrate to US markets while European capital grows increasingly stale – trapped in systems where prohibitive due diligence costs make funding decisions uneconomical for all but the largest transactions."  

Joe Heneghan, CEO of Revolut Bank UAB, adds: 

"Fragmentation is Europe's biggest drag. The consultation on the '28th regime' is the best way to fix it. If governments across the Union back it, the benefits will extend far beyond startups – to jobs, investment, and Europe's place in the global economy."

Unlocking Europe's capital potential

Investors and VCs support the 28th Regime (EU–INC) because it tackles Europe's legal fragmentation and makes scaling startups across borders much easier:

• Single EU-wide entity: one harmonised rulebook instead of 27 different national company laws.
• Lower costs and speed: digital incorporation in days, avoiding notaries and paperwork, saving 30–40 per cent in legal/admin costs.
• Standardised docs and stock options: harmonised investment agreements and equity schemes, making cross-border deals smoother.
• Legal certainty: clear governance rules and dedicated English-language courts reduce due diligence friction.
• Unlocks capital: more predictable structures attract larger VC flows, help retain unicorns in Europe, and boost competitiveness vs. the US. 

Europe has the talent, innovation, and proven ability to build and scale world-changing companies. And, as policymakers stall, Europe’s investment ecosystem — and its global allies — are taking matters into their own hands. For example, just this year: 

• Cherry Ventures launched an open letter to founders in Europe, launching the Cherry V fund and signalling a commitment to building the first trillion-dollar company in Europe.
• Atlantic Vantage Point (AVP) launched a late-stage growth fund targeting €1.5 billion.
• Sofinnova Partners raised a new life sciences–focused fund at around €1.2 billion, earmarked for early to growth-stage investments in healthtech and climate tech.
• Cathay Innovation Fund III closed its largest-ever fund at $1 billion focused on AI startups across sectors like digital health, fintech, energy, and mobility.
• Climatetech VC 2150 raised almost €200 million so far for Fund II for research-led identification of solutions to the greatest challenges of the urban environment. 
• The Norrsken Foundation committed €300 million to deliver "AI for good" across Europe—supporting startups focused on climate, health, education, and food.
• Cambridge Innovation Capital (CIC) launched £100 million funds for deeptech life sciences (February) and University of Cambridge spinouts

We also saw the launch of Project Europe in March with its aim to stop Europe's tech "brain drain" and prove the continent can produce world-class, 10,000-person companies, and EWOR in April, a radically selective founder fellowship crafted and operated by unicorn-builders working to provide early-stage founders with intensely hands-on support and capital to build world-class companies. 

And, just this month, 0TO9 emerged from stealth with its plan to build 1,000 fintechs by 2045.

According to Tord Topsholm, CEO of fintech venture builder and investor 0TO9

"Draghi was right to pinpoint our struggle translating innovation into commercialisation. Entrepreneurs are the true drivers of innovation across every sector, so we echo Draghi's call for greater investment to boost European productivity to enable us to compete with global heavyweights like the US and China.

If entrepreneurs win, we all win."

However, Topsholm has a slightly different take from the rallying cry to cut European red tape, contending that the issue of our lack of competitiveness isn't that Europe is over-regulated per se, but that we've made the process of compliance unnecessarily complex and fragmented, which stifles innovation and slows down growth. 

He asserts;

"Rather than advocating for deregulation, which would dismantle consumer protections, Europe must build better infrastructure to help entrepreneurs navigate the EU's regulatory maze more efficiently and effectively, and foster stronger cross-border collaboration to allow innovators to start and scale their companies if we want to compete globally."

Further, Dr Jano Costard, Head of Challenges at SPRIND contends that we also need a greater focus on how we do funding, as changing geopolitical and technical landscapes mean that prolonged applications for grants see projects outdated before they begin:

"Innovation can better flourish without prolonged delay and without fearing failure. At SPRIND, it takes 2 weeks from the deadline for application to selecting teams and having signed their funding contracts."

Now we need Europe to do it's part.

The good news is that positive momentum is building.

On August 29, 2025, German Chancellor Friedrich Merz and French President Emmanuel Macron confirmed their support for a truly pan-European startup legal entity. 

Act now to make Europe the best place to start and scale a business

The public consultation closes on 30 September, with new laws expected in early 2026. EU–INC is calling on Europe's policymakers, founders, startup teams, investors, and ecosystem leaders to take action now. 

Your feedback helps shape the 28th Regime and push for a clear, simple framework that makes Europe the best place to start, fund, and grow a business.

Visit eu-inc.org/cta to make your voice heard.