EU Startup Commissioner Navigates Regulatory Challenges in Bid to Boost European Tech

When Ekaterina Zaharieva was appointed as the European Union’s first startup commissioner, Brussels sent a clear message to the continent’s ecosystem of would-be tech moguls: We’re on your side.

One year into her role, the long-serving Bulgarian politician finds herself at the center of some of the most anticipated and contested startup-facing policies the commission has ever produced. From the proposed “28th regime” to the AI Act, Zaharieva is navigating the fundamental tension between the lightning pace of startups and the deliberative nature of policymaking.

“Sometimes, being a bit slower is actually positive because it keeps a democratic standard,” Zaharieva told Sifted during an interview in her Brussels office. “Imagine one day you wake up to new legislation. I don’t think the private sector would be very satisfied with that.”

The most prominent initiative under her purview is the so-called 28th regime, a pan-European corporate entity system promised by Commission President Ursula von der Leyen last summer. The proposal aims to simplify regulations and make cross-border investment easier throughout the region, potentially helping European startups scale more efficiently and compete globally.

However, recent developments have tempered expectations. A leaked document suggested the 28th regime might be implemented as a directive rather than regulation, potentially creating variations in how different member states implement it. Startup advocacy groups like EU Inc warn this approach could introduce 27 different interpretations, adding complexity rather than removing it.

Zaharieva has aligned herself with the startup community on this issue. “My opinion is that it should be regulation,” she stated firmly. “The preference in the commission is for regulation because it means equal implementation everywhere.” She remains optimistic about gaining member states’ approval, emphasizing that “it is a 28th regime, we’re not asking them to replace their own regimes, which would be much harder to achieve consensus on.”

The commissioner is pushing for an ambitious approach regarding the scope of the new rules. While some discussions have limited the focus to corporate entity registration, Zaharieva believes that would be insufficient. “My opinion is that we should try to be as ambitious as possible,” she said, suggesting areas like insolvency procedures, labor law and taxation should also be considered.

On the controversial AI Act, however, Zaharieva’s position diverges from many European founders who have criticized the world’s first comprehensive set of AI laws. Critics, including former Italian Prime Minister Mario Draghi, argue the regulations will hamper Europe’s competitive position against the less-regulated approaches of the US and China.

“There’s a lot of propaganda against the AI Act,” Zaharieva countered. “I think it’s good that we have one regime… It will keep a European spirit of AI, that we respect and trust humans, which is not a cliché.” She believes the private sector’s concerns stem less from the concept of a unified regime and more from uncertainty about implementation details.

The commissioner argues that smart regulation has historically benefited European innovation: “Fintech, for example — through regulation, we have facilitated unicorns in the sector. The goal of the AI Act is to harmonize and facilitate AI startups.”

Beyond regulatory frameworks, the EU is taking direct financial action to support its tech ambitions. Last month, the commission unveiled plans for a €5 billion Scale Up fund targeting strategic technologies. The EU has committed €1 billion, with private investors including Novo Holdings and Sweden’s Wallenberg family contributing €1.5 billion more.

“The biggest problem is scaling,” Zaharieva noted, explaining that while seed capital is readily available in Europe, growth-stage funding remains challenging. “This will be purely private and market-driven. We are not going to intervene in the decisions of the fund manager,” she emphasized. The commission will soon announce an open call for a fund manager to oversee the initiative.

While focusing on new funding mechanisms, Zaharieva is also reviewing existing programs like the European Institute of Innovation and Technology (EIT), which has faced scrutiny following fraud investigations at one of its sub-organizations. “We are going to preserve and even expand what works well, but we also have to really listen to what is not working well, and how to improve it,” she said diplomatically.

Looking beyond funding, Zaharieva highlighted market access as a critical challenge for startups. “When I meet with startups, the first thing is access to funds, but the second is how fast they can access the market and how fast they can find clients.” She believes the EU can support entrepreneurs by expediting product certifications and prioritizing innovative European companies in public procurement.

Despite the challenges, Zaharieva remains bullish on Europe’s fundamental strengths. “We should do better in some domains, but we have everything that we need,” she concluded. “We are the biggest single market. We are very predictable. We are democracies. We believe in multilateralism. We are a rich continent. We are the best-educated continent… I really believe that we should see those advantages and have self-confidence.”