An innovation-driven economy should be the goal of policymakers everywhere. Enabling entrepreneurs to launch and build new firms generates economic activity and drives wealth creation. This is good for everyone. Yet Europe has been heading in the wrong direction for years when it comes to fostering innovation. This is due to many systemic factors, including structural policies that impede the efficient allocation of capital and temper the availability of risk capital.
The Draghi Report several years ago brought the issue to the forefront, but so far, little has been done to address the EU’s inability to drive innovation and facilitate entrepreneurship in a meaningful way.
EU Inc. is a new legislative proposal in Europe that seeks to address these shortcomings.
The European Commission (EC) published the EU Inc. / 28th-regime proposal package on 18 March 2026. The mission is to create an EU-wide framework that aims to make business creation easier, streamlining cross-border activities to improve the startup/scale-up ecosystem.
A Competitiveness Compass for the EU
The proposal states:
“While the European Union is regarded as one of the most attractive regions for companies due to its single market of over 450 million people, robust infrastructure, and public support for innovation, the EU is lagging behind its major competitors.”
And;
“Start-ups and scale-ups are known for their agility, risk-taking nature, and focus on scalability, and play an increasingly important role in driving innovation and economic growth. They continue to shape the business landscape, increase competition, and provide a major source of job creation. However, to be able to do this, companies, and in particular startups and scaleups, need a predictable legal framework that is conducive to growth and adapted to face the new economic challenges in an increasingly digital world. To this end, the corporate rules provide the backbone of the legal framework necessary for an enabling business environment and to attract investment. However, one of the overarching problems that companies still face in the EU is the fragmentation of rules, including corporate rules, across Member States and the resulting obstacles for companies across the single market.”
The proposal’s mission is to foster:
- a common corporate legal framework for companies in the EU,
- simple and efficient corporate rules and procedures throughout their lifecycle, and
- an enabling framework to invest.
Sebastien Marchon, CEO of Rydoo, commented to CI that the EU Inc. initiative is a very positive step and that he strongly supports the direction the Commission is taking.
“One of the biggest challenges for European startups today is fragmentation. Building a company across Europe still means navigating multiple legal systems, regulatory frameworks, and administrative processes. Anything that reduces this friction and helps entrepreneurs scale faster across the continent is a step in the right direction,” said Marchon.
He said EU Inc. should be viewed as a starting point that could help a more coherent ecosystem for EU startups, creating conditions where they can compete globally like with the US, China, and other nations.
“This is a race against time. Europe has an extraordinary opportunity to create a more founder-friendly environment that benefits everyone — entrepreneurs, employees, investors and governments alike — but it will need to move quickly,” he said.
He cautioned that reforms at this scale must be implemented carefully and the goal should be to move fast but should not create new layers of complexity.
Marchon declared that “If Europe gets this right, it could unlock a new era of innovation and entrepreneurship across the continent.”
One issue that is frequently left alone in Europe is the question of taxes and entrenched entitlements. Improving these aspects of the innovation ecosystem viability could drive huge benefits but the changes would probably be unpalatable for many jurisdictions.