Why Europe's angel investors are rallying behind EU-INC's 28th Regime

When big funding rounds grab headlines, it's easy to forget the quiet, powerful force at the base of Europe's startup ecosystem: angel investors. 

This large and diverse group often backs founders with anything from a few thousand euros upwards, typically at the riskiest, earliest stages. 

Many are former founders (sometimes of unicorns), others are industry specialists in niches like fintech, biotech, or deep tech.

Collectively, they fuel innovation, create jobs, generate wealth, and push new ideas forward. It's little surprise, then, that many angels I spoke to — both on and off the record — are enthusiastic supporters of the proposed 28th Regime: an EU-wide legal structure that would allow startups to incorporate once under a single regime, rather than juggling 27 different national company laws.

If implemented, it would harmonise company formation, shareholder rights, fundraising, taxation, and reporting — slashing the bureaucratic friction that comes with building and raising across borders.

Submissions close on EU Inc's 28th regime today

Here's what just a few angel investors had to say:

Regulatory headaches in action

Carmen Alfonso Rico, founder of Cocoa Ventures — a VC turned angel backing founders at pre-seed and supporting them as their "in-house VC" — knows this bureaucracy all too well. 

Before launching Cocoa, she'd already tested the waters of US venture through a small AngelList side fund. When structuring Cocoa, she debated whether to set up in Luxembourg or the UK. At the same time, was working on a German investment — and that's when reality hit.

"The complexity of the notary process made it clear: doing everything in-house would have been impossible for a $15–17 million fund," she told me.

AngelList, on the other hand, offered a turnkey infrastructure.

"AngelList handles state administration and cross-border formalities, allowing us to focus on investment rather than bureaucracy."

The result: Cocoa was set up as a US fund, with its management company operating out of the UK under FCA regulation through an appointed representative structure. A classic case of European red tape pushing talent to pick simpler jurisdictions. Fixed costs, slow deals, and irrational admin For small fund managers in Europe, the regulatory load is crushing.

"If you're making investment decisions in the UK or Europe, you need to be regulated — and that's expensive," Alfonso Rico explained.

"The UK is arguably the most efficient, but fixed regulatory costs are so high that running a fund below $10 million is nearly impossible. A $10 million fund and a $100 million fund face roughly the same fixed costs — but only the latter can spread those costs across a much larger capital base."

It's a frustration shared by Simon Leicht, a General Partner at SDAC Ventures, an early-stage venture partner based in Berlin that collaborates closely with deeply technical founding teams right from inception. 

Their support spans from helping with first fundraises to recruiting initial commercial talent and securing early customers. They boast a portfolio of over 100 pre-seed and seed investments across sectors such as AI, climate, robotics, space, biotech, and crypto. Some notable names they've backed include Orbem, MarvelFusion, Meatable, Sorare, and Helium.

On the role and burden of microfunds and small investment vehicles, he contends that in Europe, microfunds serve as the professional equivalent of the prolific US angel scene, writing the first critical checks that get founders off the ground. 

According to Leicht, "the problem is, the system actively works against us." "Administrative and regulatory costs are disproportionately high for funds under €10 million, making the model incredibly challenging."

"Since a smaller fund writes smaller checks, these fixed costs create a much heavier proportional burden. 

A €10,000 lawyer bill, e.g. because of a legal DD on a foreign companies' documents, barely registers on a multi-million euro investment, but for a €100,000 check, it represents a crippling 10 per cent of the capital— money that vanishes before the founder can even start building.

This is especially damaging in the fragile early stages where every single euro is crucial."

Significant disincentives to cross-border invest

According to Leicht, the administrative burden of investing across Europe is staggering:

"We're pan-European investors because incredible talent is everywhere, but that means our lawyers and accountants have to untangle completely different legal and tax documents for every single investment."

Further, that cost doesn't just hit once; it compounds over a fund's entire lifecycle. 

"There's little standardisation—we lack a simple SAFE note equivalent, and in a major market like Germany, you can't even find one universal standard for a convertible loan.

We recently made an investment where part of the documentation wasn't even in English - required by law to be in the national language."

Alfonso Rico shared similar frustrations: 

"Power of attorney, notary fees, and legal costs can make a €10K angel investment irrational if €3K goes to admin," she said.

Deals routinely drag on for months. 

"I've seen Spanish deals take months from term sheet to closing, including incorporation — that's normal. t In one Spanish company I invested in — the term sheet was signed before Christmas, legals started in January, and the investment closed in May."

— Meanwhile, in Estonia, as a journalist, I've seen angels wire €100,000 on the same day after a quick chat at a conference networking table for a convertible. I spoke to a Ukrainian company that had a €50k raise just like this over the weekend, while here in Lviv, as I write this article. 

The disparity is stark.

And the reality of European complexity is that investors walk away. 

One angel told me she planned to do a €10,000 deal late in one quarter earlier this year, but backed out when she realised it would mean spending a day at a notary's office in another city — right before a long-planned trip abroad.

"I just couldn't justify the time and the complexity, as much as I supported the startup and its founders," she said.

Leicht also shared an example:

"One of our LPs is a Czech citizen living in the UK, investing through an Estonian entity into our German fund, which has its own famous notary requirements. 

The process took several months, as you can imagine.

We've had potential investors, capital ready to deploy, who simply give up. They don't walk away for lack of belief in the founders; they walk away because the bureaucratic maze is just too intimidating."

Stock options: Europe's weak spot

It doesn't stop at fundraising. Stock options — a critical tool for attracting talent in ecosystems where salaries lag behind the US — are still a mess. Alfonso Rico shared:

"Option schemes are completely different across European countries. Some make little sense — you get taxed on money you haven't got. It makes hiring and incentivising talent much harder for startups. And all this in a world where the competition for talent is fierce."

She pointed to Uber as an example:

"From what I heard, Uber changed its remuneration strategy in Europe because options weren't as motivating as in the US. If you're Uber, you don't care so much. But if you're a startup, paying someone 120K instead of 80K salary is life or death — at team level, that's months of runway."

Founders on planes, funding in San Francisco

Many angels told me about founders who simply moved to the US for ease of doing business and fundraising. Alfonso Rico sees it constantly.

"I spend three to four months a year in San Francisco," she said.

"It's insane — I can be there for a month and just meet European founders all day. They move because it's the best ecosystem to build - it offers the most competitive conditions. The problem for Europe is that the value created and the flywheel effect will stay there."

Leicht agrees, asserting:

"The absurd result of all this? We're actively pushing our best founders to the US. We're seeing a growing number of European founders incorporating in Delaware from day one — not for the market, but simply to use a standardised SAFE note.

We are literally exporting our future unicorns because of our own bureaucracy."

The quicksand time suck of bureaucracy

And then there's the other hidden cost: time.

"Time is a founder's most valuable resource," Alfonso Rico told me.

"Yet I see founders spending full days at notaries or struggling with visa and residency paperwork between Europe and the UK — work that could be automated or streamlined. It's not just time lost, it's mental load.  Every week spent on admin is a week spent building elsewhere in the world — progress compounds.

If I get one step ahead, my next step compounds — and it gets harder and harder to catch up. Competition is global, but Europe doesn't have a system that supports founders in focusing on what drives advantage and value.. It definitely doesn't. And we need it."

Italy: modern incentives, legacy red tape

Italy is a perfect example of this push-and-pull. Luigi Amati — co-founder of Italian Angels for Growth and CEO of META,a European company with offices in several countries delivering Investment, Academy and Advisory Services in R&D. We met in Bologna a couple of weeks ago. He has seen the ecosystem evolve from the inside.

"I was an angel investor before I knew I was one," he said. He started in 2007 with eight others, pooling €900,000. "We grew like a rotary club: inviting people we knew.

We quickly expanded to 40, then 80, and today it's a club with over 300 members — one of the largest early-stage investor groups in Italy."

The group operates through a club deal model, pooling €200,000 to €1.5 million per startup, following a US-inspired syndicate structure. Italy's angel market is now roughly 10× bigger than in 2007, and tax incentives are generous: individuals can claim a 65 per cent deduction on investments up to €100,000, and vehicles get 30 per cent.

But the processes? Stuck in the 1990s. Capital increases still require in-person notary deeds, slowing rounds by weeks. Foreign investors must obtain Italian tax IDs, translate legal documents, and sometimes appear in person — not exactly a cross-border-friendly process.

Amati says the incentives now rival the UK's EIS/SEIS schemes but shared, "the question is whether it will remain stable. The UK's EIS has been in place for over 30 years. We hope Italy has now chosen to stay with a comparable path." Further, cross-border investing remains another story entirely. 

"Incentives are national, so you're biased toward investing in your own country. It's harder to invest cross-border unless you have strong personal networks."

He shared how in the US, angel clubs invest across states under one legal framework. "In Europe, trying to do the same leads to all kinds of trouble," he said.

For him, the 28th Regime "is the push we need."

"For over 20 years we've tried to create a European startup passport or a single framework for business angels, but it's always failed against national legislation. Now, momentum is building — it really feels like now or never."

AIFMD and the structural drag on funds

Stefano Bernardi — founder of Unruly Capital — straddles the line between hands-on angel investing and structured VC, backing everything from climate tech to algae to psychedelics. He treats the fund as a continuation of his angel journey, just with LPs "tagging along." While Unruly has a few investments in Germany and Italy, he's frank:

"They are substantially harder and more expensive to manage than the ones in the US and UK. We have more or less stopped investing in Germany also because of this," he said, though he makes exceptions for exceptional founders.

"Most portfolio companies eventually flip to the US — a slow, expensive process that puts them at a disadvantage compared to US or UK companies."

And then there's the Alternative Investment Fund Managers Directive (AIFMD).

"It makes starting a VC fund MUCH more complicated and costly than what it is in the US," Bernardi said.

To be clear, Europe's founders and angels don't lack ambition — they're constrained by structures that haven't kept pace with the reality of building globally competitive companies.

Leicht contends that initiatives like the '28th regime' aren't just a 'nice-to-have'—they're absolutely critical for Europe's competitiveness.

"We need common, streamlined frameworks that let capital flow to innovation. Let us focus on what we do best: backing great founders, not navigating redundant paperwork."

The 28th Regime: Europe’s best shot at leveling the global startup playing field

From notary queues and tax IDs to mismatched stock option regimes and AIFMD red tape, these frictions quietly drain time, money, and momentum from the ecosystem. The result is predictable: capital and talent flow to jurisdictions that make it easier to build.

The 28th Regime is the most concrete chance Europe has had in decades to create a genuinely single market for startups and investors.

If Europe wants its next generation of companies to build here — and stay here — this moment matters.

The European Commission's consultation on the 28th Regime is open until close of business today. 

If you're a founder, investor, or ecosystem builder, now is the time to speak up. Submit your views here and help shape the future of how we build across Europe.