I just read Atomico’s 2025 report—why the ‘28th regime’ fight should worry (and excite) founders

European tech just got political – here’s what actually changed

Atomico’s State of European Tech 2025 isn’t just a scorecard. It’s an agenda. The firm urges policymakers to “Fix the friction; Fund the future; Empower talent; Champion risk” – turning a trend of rising investment into a call for structural reform. The near-term hinge: whether the EU embraces a “28th regime” – a single, pan‑EU company form — as a regulation (uniform, immediately applicable) or a directive (fragmented, slower, status-quo). That choice will directly affect cost, speed, and cross‑border scaling for startups and scaleups, especially in AI.

This matters because policy, not just capital, will determine whether Europe builds globally competitive AI and deep‑tech companies or remains a net importer of platforms. The report even carries a quote from the European Commission president, who says she wants “the future of AI to be made in Europe.” The signal: Brussels is listening — and startups are learning to lobby with more sophistication.

Key takeaways for operators

Investment is rebounding, but execution now turns on policy levers: company law, capital markets, talent mobility, and risk appetite.
The 28th regime is the decisive test. As a regulation, it creates a uniform legal vehicle across the EU; as a directive, it preserves 27 interpretations and today’s friction.
Expect more organized lobbying by startups and funds. Corporate affairs is shifting from “nice to have” to a core go‑to‑market enabler.
Backlash risk is real: if this push is seen as partisan or elite‑interest, it could harden public distrust and slow reforms.
Near‑term action: audit your cross‑border costs (entity management, ESOPs, hiring, procurement) and build policy scenarios into 2025-2026 plans.

Breaking down Atomico’s four policy priorities

Fix the friction: Today, a startup operating in Germany, France, and Spain often runs three entities, three payroll stacks, and three benefit schemes. Stock options are taxed and treated differently; KYC/AML and licensing vary by market; compliance for frameworks like the AI Act will otherwise be duplicated country‑by‑country. A 28th regime aims to remove this structural drag.
Fund the future: Europe’s scale‑up bottleneck is less seed, more growth. The agenda points to deeper pools of patient capital (e.g., mobilizing pensions, EIB/EIF mandates), healthier IPO venues, and procurement policies that actually buy from startups. For AI, where compute and talent are expensive, the cost of capital is now a competitiveness variable.
Empower talent: Visa agility, recognition of skills, and ESOP harmonization matter more than slogans. Faster, predictable pathways for non‑EU technical hires, cross‑border remote work clarity, and portable options are practical levers to retain senior operators and researchers.
Champion risk: Europe’s insolvency and failure‑stigma norms deter second‑time founders and bold R&D bets. Sandboxes, safe harbors, and lighter‑weight liability in early stages can raise the tolerance for experimentation — without abandoning consumer protection.

The 28th regime: the difference between teeth and talk

Atomico is explicit: a regulation has “teeth,” a directive perpetuates the patchwork. In EU law, regulations apply uniformly across member states; directives require national transposition, often taking 18-24 months and resulting in divergent practice. For operators, that distinction maps to measurable costs: fewer entities to set up and audit, one standard ESOP framework, a single corporate form for procurement and banking, and one set of rules for cross‑border mergers and fundraising. For AI companies, that uniformity reduces the overhead of scaling labs, data partnerships, and regulated deployments across markets.

The proposal builds on ideas promoted by EU‑INC and mirrors detailed papers from groups like France Digitale and the Europe Startup Nations Alliance — a sign the ecosystem’s policy muscle is maturing. Packaging this as a report, video, and conference keynote broadens reach beyond insiders to both founders and policymakers.

Industry context: from regulation-first to competitiveness-first

Europe has led on digital rulemaking (GDPR, DSA, DMA, AI Act), but growth and competitiveness concerns have moved to the foreground, echoing last year’s Draghi review. The Commission’s top‑level attention — including the line that “the future of AI [should be] made in Europe” — indicates political space for pro‑growth reforms. At the same time, public trust is fragile. As one startup policy lead put it, communications work is now about “risk mitigation and reputation management,” reflecting a decade‑long distrust of the tech industry.

Risks and blind spots

Politicization: If the lobbying aligns with specific parties or culture‑war frames, it may provoke backlash and stall consensus.
Perception gap: Calls for trillion‑dollar champions can appear detached from everyday concerns unless tied to wages, services, and public value.
Regulatory whiplash: Reopening settled files to “cut red tape” could collide with strong consumer and labor protections, fragmenting support.
Partial wins: A weak 28th regime (as a directive) risks adding process without reducing friction — raising expectations and then disappointing operators.

What this changes for operators and investors

Policy has become an execution lever, not a backdrop. CFOs and GCs should model a 28th‑regime scenario: entity consolidation, ESOP redesign, audit scope, vendor contracts, and cross‑border payroll. Heads of Talent should plan for improved visa throughput and option portability — and quantify the hiring velocity unlocked if barriers fall. Product and compliance leaders should map how a uniform regime could streamline AI Act readiness and customer contracting across the EU. Investors should allocate partner time to policy coalitions; the ROI is now tied to portfolio scale‑up velocity.

Recommendations

Prepare a policy P&L: Quantify today’s cross‑border friction (legal, payroll, ESOP, licensing) and identify the savings if a regulation‑based 28th regime lands. Use that to prioritize which markets to enter first.
Engage, but stay non‑partisan: Join credible industry associations (or form a coalition with peers) to advocate for a regulation, not a directive. Anchor messaging in jobs, research, and services that benefit citizens.
Upgrade corporate affairs: Treat policy like a distribution channel. Assign an owner, set quarterly objectives (e.g., ESOP harmonization, visa pilots), and create feedback loops with finance, talent, and compliance.
Scenario‑proof your org: Design ESOPs, vendor frameworks, and data‑handling policies that can migrate to a single‑regime structure with minimal refactoring. Keep localized fallbacks until legal certainty arrives.

Bottom line: Europe is at a crossroads, as Atomico argues. If the 28th regime gets real teeth and the four priorities gain traction, the cost of scaling across the EU falls and the calculus for building AI and deep‑tech winners here materially improves. If not, expect more founders to keep one foot in Europe and one elsewhere — and the growth gap to persist.