EU Startups Commissioner Zaharieva: ‘Significant Propaganda Exists Against the AI Act’

As the European Union’s first startup commissioner, Ekaterina Zaharieva finds herself at the intersection of tech innovation and regulatory policy—a position that requires balancing the lightning-fast pace of startups against the deliberate tempo of EU policymaking.

“Sometimes, being a bit slower is actually positive because it keeps a democratic standard,” Zaharieva explains from 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.”

One year into her pioneering role, the Bulgarian politician is navigating some of the EU’s most ambitious and controversial tech initiatives, including the proposed “28th regime” and the AI Act—both of which could reshape Europe’s tech landscape for decades to come.

The 28th regime, announced last summer by Commission President Ursula von der Leyen, aims to create a pan-European corporate entity system that would simplify regulations and facilitate cross-border investment. For European startups struggling to scale across fragmented national markets, this initiative represents a potential breakthrough in their ability to compete globally.

However, the project has hit recent complications. A leaked document revealed the 28th regime might be implemented as a directive rather than a regulation, potentially allowing variations in how member states apply it—precisely the fragmentation the system aims to eliminate.

“My opinion is that it should be regulation,” Zaharieva states firmly, aligning herself with startup advocates who worry a directive approach could create “27 interpretations” of the plan. “The preference in the commission is for regulation because it means equal implementation everywhere.”

The scope of the regime is also under debate. While some propose limiting it to corporate entity registration, Zaharieva believes a more comprehensive approach is necessary. “My opinion is that we should try to be as ambitious as possible,” she says, suggesting the inclusion of insolvency procedures, labor law, and taxation in the framework.

Perhaps more divisive is Zaharieva’s stance on the EU’s AI Act—the world’s first comprehensive regulatory framework for artificial intelligence. While many European founders have criticized the legislation as potentially hampering innovation, Zaharieva dismisses much of this criticism as “propaganda.”

“I think it’s good that we have one regime,” she argues. “It will keep a European spirit of AI, that we respect and trust humans, which is not a cliche.” She contends that the private sector’s concerns center more on implementation uncertainties than on the concept of unified regulation itself.

Zaharieva points to the fintech sector as evidence that regulation can actually stimulate innovation: “Through regulation, we have facilitated unicorns in the sector. The goal of the AI Act is to harmonise and facilitate AI startups.”

Beyond regulatory frameworks, the EU is also addressing funding gaps for European startups. Last month, the Commission unveiled plans for a €5 billion Scale Up fund targeted at strategic technologies. With €1 billion from the EU and €1.5 billion from private investors including Novo Holdings and Sweden’s Wallenberg family, the fund aims to help European companies scale without relocating.

“The biggest problem is scaling,” Zaharieva notes, explaining that while seed capital is relatively abundant in Europe, later-stage funding remains scarce. She emphasizes that the fund will operate on market principles: “This will be purely private and market driven. We are not going to intervene in the decisions of the fund manager.”

Meanwhile, earlier EU funding initiatives face scrutiny. The European Institute of Innovation and Technology (EIT), which manages nearly €3 billion in startup grants under the current EU budget, has weathered fraud investigations and may see its dedicated funding eliminated in the next budget cycle.

Zaharieva acknowledges the need for accountability: “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. We have to be honest when something needs improvement and not just pretend it’s not happening.”

Looking beyond funding, Zaharieva emphasizes the importance of market access 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.”

Despite the challenges, Zaharieva remains fundamentally optimistic about Europe’s startup potential. “We should do better in some domains, but we have everything that we need,” she says with conviction. “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.”

Her message to European entrepreneurs and policymakers alike: “I really believe that we should see those advantages and have self confidence.”