This Policy Recommendation Paper addresses key issues facing the EU’s startup ecosystem, particularly the lack of funding and regulatory barriers that push many startups to relocate during the scale-up phase. Despite Europe’s innovation potential, early-stage investments are limited. The paper calls for streamlined regulations, cross-border funding incentives, and stronger government support to boost business angel investments and improve liquidity for startups. Aligned with Mario Draghi’s competitiveness strategy, it offers actionable recommendations to ensure the EU remains a global leader in innovation and technology. We identify 7 key areas that need to be addressed by the EU: