Europe’s opportunity to lead through start-ups and systems change

Start-ups and scaleups are essential not only to Europe’s competitiveness but especially its resilience. They deliver breakthrough innovations to tackle urgent societal challenges—from decarbonising cities to building circular economies. Yet, despite their potential, their growth and impact are often blocked by fragmented markets, complex regulations, and limited access to private capital across the EU.

The revamped EU Startup and Scaleup Strategy (currently under development) is a major initiative designed to address these challenges. It brings together policy, finance, and legislative measures to improve and simplify framework conditions for start-ups and scaleups—making it easier to grow, attract investment, and operate across borders. For climate-focused ventures, this is a key moment to align with Europe’s environmental, economic, and social targets.

Based on our vast experience supporting Europe’s entrepreneurial ecosystem, Climate KIC has answered the EU’s call for expertise with a set of recommendations to guide its Startup and Scaleup Strategy.  

Recommendation 1: Invest in start-ups that can deliver multiple levels of impact

Europe faces dual challenges: achieving carbon neutrality while ensuring economic competitiveness. Start-ups and scaleups that address urgent climate challenges are essential for Europe’s long-term prosperity. These ventures create substantial value beyond the balance sheet. We’re talking about the measurable impact that comes from decarbonising industries, advancing circular economies, and addressing social equity.

At Climate KIC, we’ve supported over 6,000 climate-focused start-ups, unlocking €3 billion in follow-on investment. We know firsthand that the best climate solutions—whether from unicorns like Climeworks or Ynsect — are not just solving environmental problems but generating entirely new markets and green jobs. These companies exemplify how start-ups can deliver economic and societal value, driving systemic change across sectors.

However, scaling these companies requires more than just access to venture capital. It’s about aligning with Europe’s broader transformation goals. With scarce resources, we must prioritise investing in ventures that tackle real, pressing challenges and deliver multiple levels of impact. This means supporting companies whose innovation can transform industries and deliver concrete benefits for our society at large.

It’s up to the EU to create the infrastructure and policies that enable these start-ups to thrive. This requires overcoming the fragmented single market, ensuring access to coherent regulatory frameworks, and leveraging the demand from cities and regions to scale solutions. Individual tech unicorns cannot achieve Europe’s climate and economic goals; we need a systemic approach, where public institutions, industries, and private capital work in tandem to scale solutions.

Recommendation 2: Scaling must happen where it matters — in cities and regions, and to the benefit of local communities and society

Scaling up climate ventures cannot be approached as an abstract or isolated process. It must be grounded in the real needs and ambitions of places—cities, regions, and local communities—where systemic challenges are felt most acutely, and where innovation has the greatest potential for tangible, lasting impact.

Europe’s cities and regions are on the frontlines of the sustainability transition. They are grappling with the pressures of decarbonisation, adaptation, resource constraints, and social cohesion—while also being testing beds for experimentation and opportunity. When start-ups are connected to these local contexts, they can offer concrete solutions across housing, energy, food, transport, and health systems. Better yet, they can co-create ideal scenarios with public authorities to ensure relevance, accelerating adoption and building trust.

We’ve seen through large-scale initiatives we lead like NetZeroCities and other place-based programmes that innovation is most effective when it complements local transformation agendas. In these contexts, they become enablers of systems change: integrating into public procurement pipelines, infrastructure plans, and investment strategies that are already aligned with climate neutrality goals. 

The 100 mission-driven cities of the NetZeroCities programme have identified over €600 billion in investment needs to achieve their 2030 goals. Unlocking this demand—and aligning it with venture growth—turns municipalities and local ecosystems into launchpads for sustainable solutions. It creates environments where scaling is not only commercially viable but socially transformative.

Europe’s Startup and Scaleup Strategy must therefore enable more than just company growth; it must catalyse innovation ecosystems that create lasting value for communities. That means directing investment and policy support toward solutions that serve both environmental and social goals—and doing so in collaboration with cities, regions, and local actors who are already driving forward ambitious change. 

Mobilising action through partnerships 

In 2025, Climate KIC continues to work with stakeholders across Europe—through cities-industry dialogues, policy labs, and capital mobilisation efforts—to turn place-based as well as systemic insights into action. We’re also collaborating with VC funds and launching new initiatives like Investing for 1.5C to support businesses dedicated to transformative climate impact. 

As our Head of EU Policy, Katarzyna Bałucka-Dębska, notes: “Scaling climate innovation in Europe is not about creating isolated success stories—it’s about building resilience, strategic autonomy, and a thriving economy. In mid- to longer-term, only ventures which take into account operational and financial risks from climate and environmental changes can become resilient, and hence competitive, globally. Furthermore, with scarce resources, the winning start-ups must be those solving pertinent challenges across Europe and beyond, delivering a thriving economy and society. That’s where true impact—and Europe’s true leadership—lie.“

Read our full contribution to the EU Startup and Scaleup Strategy for evidence-backed recommendations on turning Europe into the global hub for climate innovation.