The EU wants to help startups. Can startups survive EU regulations?

• European startup investment is booming, but the startups themselves are struggling to scale.

• New EU privacy rules killing personalized ads and Norway’s “wealth tax” make scaling even tougher for startups.

• The EU is pushing for startup-friendly policies, but can they move fast enough to keep talent from fleeing to the US and China?

Big things are brewing in Europe.

The EU is stepping up for startups with plans to cut red tape, boost funding, and simplify regulations. The goal is to turn Europe’s startup buzz into long-term growth. But can Europe overcome its scaling problem?

Here's the good news: Europe’s talent pool is booming.

• With over 3.5 million skilled tech professionals and startup investment growing faster than anywhere else (13% annually, compared to 8% in the US), the foundation is solid.

• In AI alone, investment has grown ninefold in a decade, putting Europe neck-and-neck with China's growth.

But here’s the catch: while Europe is a great launchpad for startups, scaling them in Europe remains a nightmare.

• EU Commission President Ursula von der Leyen nailed it in a recent speech: “We are roughly as good as the US at creating startups. But when it comes to scale-ups, we are doing much worse than our competitors. We have to close that gap.”

Regulatory and cultural roadblocks

The challenges aren’t just about funding or scaling — they’re also about mindset and policy. Take Germany, for instance. As Ole Lehmann (German Indie Hacker) says, there’s a pervasive anti-entrepreneurship vibe.

Risk-taking and startup culture are often frowned upon, as if building a business automatically equates to exploiting workers. It’s a cultural hurdle that stifles ambition. The saying “America innovates, China imitates, Europe regulates” feels painfully accurate.

Then there’s Norway’s controversial “wealth tax," which taxes unrealized gains. For founders who are asset-rich but cash-poor, this can be a crippling blow, especially when their startups are still trying to find solid ground. It’s policies like these that make entrepreneurship in Europe feel more like a punishment than an opportunity. As Axel Hunter (Norwegian founder) says:

Norway isn't built for people like me, it's a place to settle down into a job, build a pension and retire, personally I've found it's not built for builders and founders.

New EU regulations are also throwing a wrench into the mix. Changes to data privacy rules mean companies like Facebook will show fewer personalized ads in Europe, significantly impacting SMBs that rely on targeted advertising for growth.

• In Europe, small businesses account for over 99% of all companies and provide jobs to over 100 million people.

• On average, every euro spent on Meta ads generates €3.79 in revenue, but reduced personalization could shrink these returns.

Meet the new boss in town

The EU has created its first-ever Startup Commissioner, Ekaterina Zaharieva, to simplify laws and cut bureaucracy.

A newly proposed European Savings and Investments Union aims to stop the talent drain by keeping funding locally.

But will these changes come fast enough to make a difference?

Money talks, but Europe’s wallet is thin

The EU spends only 1.3% of GDP on research and development, far less than the US (2.4%) or China (1.9%), pushing startups to Silicon Valley.

Its solution? A European Savings and Investments Union to keep funding local — but will it be enough to retain top talent?

The regulatory tightrope

Simplifying rules sounds great, but it’s tricky. Zaharieva aims to cut bureaucracy, while new regulations like the Digital Fairness Act target manipulative practices. The challenge? Keeping things fair without stifling innovation.

European innovators

With companies like Klarna taking their IPOs to the US, Europe risks losing its brightest innovators. While events like Web Summit and Slush highlight a thriving scene, cultural and policy shifts are needed to keep startups at home.

EU Indie Hackers

For Indie Hackers, these changes could be huge. Whether you’re navigating cross-border challenges, chasing frontier tech funding, or just trying to grow in a more supportive ecosystem, the EU’s focus on startups might tip the scales in your favor. But let’s be real: Europe’s startup culture has a long way to go.

For now, keep hustling, stay adaptable, and keep an eye on Brussels — your indie project might just become Europe’s next big thing.