This analysis was first published in SvD Näringsliv, in Swedish, on March 19th, 2026. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

The EU is reaching out to the startup world with its new proposal “EU Inc.” Regulations for starting companies are to be simplified. But it misses the region’s most pressing problem.

It is the day before Christmas Eve 2025. In Berlin, a startup is trying to finalise an investment.

There is just one mandatory step left. For the process to be valid, the company’s management must sit and read all the documents aloud to a notary. The whole spectacle takes over five hours.

This is the reality in large parts of the EU. An excessively slow and bureaucratic system that complicates something other countries handle with ease. After persistent lobbying from the startup world, this understanding is beginning to sink in, even in Brussels.

The new proposal “EU Inc” is one example of this.

The European Commission hopes it will make it easier for new European companies to be started, and ideally for them to remain in the region too. Among other things, it will be possible to start a company within 48 hours, and it must not cost more than 100 euros to do so. Processes are to be digitised, and it will be possible to register a company across the whole EU through a single interface rather than going through each individual EU member state. It is to be in place by 2028.

This might not sound like a revolution to anyone who has never tried. One can go so far as to say it is strange that it does not already work this way. Given the example of the German notary, there are clearly improvements to be made. In Sweden, however, these problems are minimal. Starting and running a company digitally is very smooth. The Swedish Companies Registration Office and the Swedish Tax Agency have made otherwise quite complicated processes simple. Those who have gone furthest of all are Estonia, where you can even become a digital citizen.

While the regulatory simplifications of EU Inc are welcomed by many startups, one should not exaggerate their impact. The primary problem the EU has is not about starting companies — it is the opposite. Where do these companies end up when they eventually become large and successful? And what happens along the way?

Because the real problems start early, but long after a company’s registration.

It is about access to capital in the early stages of a company’s life. It is easiest if entrepreneurs seek money from someone in the same city, but if that is not available, one must look further afield. Despite the home continent being large, European companies often find it easier to obtain money from the other side of the Atlantic than from nearby. And if you want American venture capital, investors prefer it if you have a company registered in the US. The standard is to do so in the state of Delaware, which has the most predictable rules for all involved. Swedish Lovable is registered there, for example.

Then comes the next problem. What happens when startups become established companies.

This became clear when the EU’s legislative package the Digital Services Act (DSA) was presented and was supposed to hold the tech giants to account. Which European companies were large enough to be considered tech giants that should be regulated?

Zalando, Booking.com, and a handful of Cyprus-registered pornography sites. There are no large European tech companies of the same calibre as Meta, Google, and Amazon.

First and foremost, American companies are happy to acquire promising European companies early. Google’s AI lab DeepMind, founded in the UK, was acquired back in 2014, long before the current AI boom began. Swedish-Estonian Skype was bought by Microsoft. Finnish Wolt was bought by DoorDash. The list is long.

The second reason is that there is no common European stock exchange to list on. Spotify and Klarna are both on the New York Stock Exchange, despite having Swedish roots. The alternative for these companies might have been London, or Frankfurt if one is extremely generous. But realistically, neither was genuinely in the running.

Every individual stock exchange in the EU is too small and lacks the liquidity needed for a good investment climate suited to international companies. In the Nordic region alone there are five different stock exchanges. That is far too fragmented to function well. And so companies seek out the US instead, where they can access capital from investors around the world.

The EU simplifying regulations for startups is good news for entrepreneurs. But it sidesteps the biggest problems entirely. The startup world’s gravitational pull runs strongly westward — at every stage of the journey.

American venture capital leads to American company registrations. Which are easily acquired by large American companies. Or alternatively listed on American stock exchanges.

Until those challenges are addressed, the European startup scene is likely to remain much as it is. EU Inc makes European Commission President Ursula von der Leyen look bold and strong. But if you ask the wrong question, you get the wrong answer. And that is precisely what has happened with EU Inc.