European startups need your savings

Hi there,

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Last week, I went to Brussels for this year's EIC Summit, an event that wrapped up another year at the European Innovation Council. ICYMI, the EIC focuses on supporting deeptech companies and researchers in the continent through grants and funding opportunities, including the EIC Fund, which invests money directly into startups together with other VCs.

Since its launch in 2021, the EIC has become the largest deeptech investor in Europe. It has poured €1 billion in startups and scale-ups — and attracted €2.6 billion in co-investments from the private sector along the way. In total, the Council has provided €6 billion to support European deeptech so far. Check out the Impact Report and its TL;DR infographic to learn more about that.

The event, however, wasn't focused on boasting about the numbers and patting each other on the back. I didn't catch much of the plenary discussions being stationed in the networking zone with my video recording gear, but many on-stage conversations gravitated toward Europe's need to shift gears and accelerate innovation in order to achieve the coveted strategic autonomy.

An important part to this task is to actually mobilise more late-stage capital for European companies to allow them to grow and scale on the continent without necessarily having to look for funding or M&A opportunities in the US or elsewhere. And to achieve that, the Commission wants to leverage the money European citizens have on their savings accounts.

“A very important difference between the US and Europe is that Europeans are saving like hell,” Michiel Scheffer, President of the EIC Board told me at the event. “An average European has something like four months of salary in savings, […] which is not the case in the US. The US has to get capital from outside to be able to invest.

“A lot of the capital that the US invests is coming from Europe. Every year, €600 billion of savings are invested in companies through the US. That's 600 times our budget.

“So if we are able to attract European savings […] from individuals, or from family funds, or from pension funds, that is basically the big challenge to organise in the next 18 months. And what I see is that pension funds [in particular] are getting more sensitive of contributing to the autonomy of Europe also in view of what happens in the US… or with the US.”

This part of the conversation reminded me of an interview I recorded with Scheffer at the EIC Summit 2024, a year ago — but this time the Commission seems to be more serious about putting the Europeans' savings to good use. And to that end, as it turns out, it recently unveiled the Savings and Investments Union (SIU) initiative to encourage EU citizens to “allocate a portion of their savings into productive investments to finance the EU’s objectives (e.g. climate transition, innovation or defence).”

The plan, however, might be a tough sell after the bankruptcy of Northvolt, which had attracted some $2 billion from pension funds (European and otherwise). I put a question on that to Scheffer, to which he had a predictably optimistic answer.

“I don't see it as a deterrent, I see it as a lesson,” he said. “A good funding system should be designed in [such] a way that there is no political pressure on doing or not doing an individual investment. It needs to be a well-structured process. The EIC offers that. […] That is the kind of process that pension funds appreciate.”

Adding to that, Scheffer noted that he “got comments that some investors were, let's say, politically incentivised or pressured to invest in Northvolt. That's not a good thing.”

In his view, the EIC is able to design a system with a much higher level of objectivity that includes expert evaluations and collective decision-making without political pressure. On the other hand, he argued, the Council can also organise a better supervision process that could've prevented the scaling-up issues that Northvolt faced.

I guess we're going to see very soon whether the Commission's attempt to find more money to create more domestic hyperscalers will work. In the meantime, feel free to comment or reply to this email and let me know how big of a portion of your own pension savings you'd consider investing in European startups — I'm all ears.

Also, if you're interested in this and other topics discussed at the EIC Summit, subscribe to unzip.media on YouTube to watch the interview with Scheffer and others in full — I'm almost through with editing, so videos are coming soon.

Take care, and until next time!