EU arranges €5 billion package to keep tech firms from moving abroad

European officials are racing to put together a huge investment fund that could help the continent hang onto its best tech companies instead of watching them get bought up by American giants.

The plan centers around the Scaleup Europe Fund, and it’s already getting attention from some heavy hitters. Denmark’s EIFO sovereign wealth fund is talking about investing, along with Spain’s Criteria Caixa SA and the Novo Nordisk Foundation.

Currently, the fund is aiming for €5 billion to start, which is roughly $5.8 billion in U.S. dollars. They’ve managed to secure promises for €3 billion so far, and another €1 billion is expected to come from the European Innovation Council, the EU’s own tech accelerator.

But that’s just the beginning. The European Commission actually wants to raise €25 billion eventually, according to their spokesperson. It’s an ambitious target that shows how serious they are about this problem.

There’s a big meeting happening on Tuesday where commission officials will pitch the idea to more potential backers. Even the European Investment Bank is showing up, though they haven’t made up their minds about jumping in yet.

The entire focus is on larger investment deals, specifically those worth more than €100 million.

Europe keeps losing its best tech companies

Advanced Micro Devices (AMD) bought Finnish AI lab Silo AI for $665 million just last year. Apple grabbed French AI company Datakalab back in 2023. It’s becoming a pattern that has EU officials worried.

The fund comes at a time when the EU wants more independence from ongoing trade fights between America and China. They’re tired of being caught in the middle.

Any company that receives funding from this fund will be required to maintain its headquarters and primary operations in Europe. The funds will target what bureaucrats call “strategic and enabling technologies”, such as robotics, advanced materials, clean energy, and biotech. They plan to pick an outside manager to run everything by January 2026.

According to Cryptopolitan, Europe is already racing to build sovereign AI, with billions pledged to homegrown AI ventures.

Industry experts doubt that the fund is big enough

European entrepreneurs have been complaining for years about a funding gap during a time when their companies are trying to grow. That’s often when founders face a tough choice: sell out, move to Silicon Valley, or watch their company die.

Andreas Schwarzenbrunner from the venture capital firm Speedinvest GmbH thinks the fund is headed in the right direction, but he’s unsure it’s big enough. “The Scale-Up Fund is a good first step, but let’s be honest about the scale,” he said. “While the €3 billion commitment is a positive signal, even €5 billion remains tiny compared to what’s happening globally.”

He thinks Europe needs to spend way more money if it wants to compete. “If AI, quantum, and other key technologies will define Europe’s future competitiveness, we need to spend an order of magnitude more, and the EU needs to be a much larger anchor,” Schwarzenbrunner explained.

The fund represents the old continent’s latest attempt to stop bleeding tech talent to other continents.