TL;DR: Europe’s €5B Scaleup Fund Will Create More Zombies Than Unicorns
Europe’s €5B Scaleup Fund aims to bolster late-stage startups, but the real issue isn’t funding, it’s the inability to navigate regulatory barriers and build sustainable businesses. An overemphasis on capital risks creating “zombie startups” that stagnate rather than innovate.
• Founders should focus on bootstrapping to build lean, value-driven businesses.
• Europe’s culture must embrace agility, faster pivots, and a tolerance for failure.
• Women entrepreneurs, in particular, thrive with self-reliant, resourceful strategies like using AI and no-code tools.
Tired of unnecessary reliance on funding? Learn from smarter approaches in The EU Funding Labyrinth to effectively navigate available capital without being dependent. Start building resilient businesses today!
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I’ve asked this question countless times. Not as a detached observer or consultant but as a founder who’s spent over a decade building startups, bootstrapping my way to real insights, and mentoring female entrepreneurs across Europe. I’ve lived these challenges and seen the effects of decisions like the one driving this piece, whether Europe’s €5B Scaleup Fund will create opportunities or just inflate the bubble of what I call ‘zombie startups.’
When I launched CADChain, it wasn’t with millions of euros in early VC funding. It was with scrappiness, no-code tools, bureaucracy overload, and grants that reminded me why Europe’s startup ecosystem remains tricky. The issue isn’t funding availability. It’s what we do with it. Launching Fe/male Switch reinforced my belief that throwing money at startups doesn’t guarantee success. What guarantees success is a change in mindset, focusing less on how much we can raise and more on how quickly we can build products that generate real value while navigating Europe’s institutional complexities.
Here’s the angle almost no one is discussing: More funding, especially €5 billion earmarked for late-stage European scaleups, isn’t the savior it seems. It risks creating overfunded startups that stagnate rather than innovate, what I refer to as ‘zombie startups.’ My stance, shaped by years of hands-on building, is this: the issue is not solely capital. It’s Europe’s commercialization culture, risk aversion, and structural barriers to agile exits. These systemic problems are suffocating our deep-tech and innovation sectors.
In this piece, I’m breaking it all down: why more money isn’t necessarily better, how bootstrapping consistently beats VC dependency, and how real change requires empowering founders to pivot, fail faster, and build again smarter. Let’s dive in.
What Is Europe’s Scaleup Fund Promising?
The €5B Scaleup Europe Fund, championed by EU policymakers, aims to stop European startups from crossing the Atlantic for late-stage funding. Targeting strategic industries like artificial intelligence, quantum computing, and biotech, the initiative hopes to bolster Europe’s tech ecosystem and global competitiveness. Sounds ambitious, doesn’t it?
The big pitch at forums like Davos has been this: Europe creates industry-changing startups, but nearly a third of them relocate or exit abroad. The Scaleup Fund wants to close this gap. While that sounds like music to investors’ ears, it sets off alarms for me as a founder. Why? Because this overemphasis on capital distracts from Europe’s real problems: commercialization hurdles, regulatory maze-like complexity, and hesitance to embrace failure.
I hear founders, especially in deep-tech, complain, “No amount of funding fixes your inability to navigate permits or scale internationally from a fragmented market.” From what I see, funding without addressing cultural and systemic issues creates overly valued, underperforming entities. Enter zombie startups: flush with cash but heading nowhere.
Why the Problem Isn’t Capital
Here’s the harsh truth most policymakers don’t seem to grasp: We don’t lack funding; we lack agility. Europe’s culture punishes failure, and without exits or pivots, startups either burn through their funding or stagnate. Silicon Valley thrives because failure is treated as a stepping stone. Here, it’s a death sentence to your credibility. This mindset keeps founders tethered to mediocrity.
- Europe holds only 8% of global scaleups, despite a lion’s share of world-class research. Why? Our startups can’t turn innovation into global traction fast enough.
- Regulations take forever to navigate, costing founders time they’ll never get back.
- Late-stage funding often props up companies stuck in experimentation or bureaucracy, not scaling.
So, let me be clear: €5 billion won’t solve these structural inefficiencies. It’ll just make the lack of exits more expensive.
Bootstrapping: Why It Beats VC Dependency
Bootstrapping isn’t just my choice; it’s my philosophy. I’ve built businesses with minimal funding, leveraging tools like no-code platforms and AI to execute faster, smarter, and cheaper. Do you need millions to launch an MVP? No. MVPs can be built in hours today, especially with open AI tools. It’s excuses, not resource gaps, that hold founders back.
Bootstrapping forces founders to build lean, validate ideas quickly, and prioritize efficiency. When founders have easy access to large funds, they’re incentivized to inflate valuations and experiment without accountability. Bootstrapping founders, on the other hand, master SEO, customer acquisition, and automation early because cash flow survival depends on it. Isn’t that more sustainable long-term?
- No-code and AI are your competitive edge: I built Fe/male Switch, a gamified incubator platform, entirely using no-code, saving tens of thousands in development costs.
- Fail fast; fail cheap: Bootstrapping minimizes your exposure, letting you learn from smaller mistakes.
- You control your vision: Outside investors often derail a founder’s focus in favor of valuation hype or unrealistic growth expectations.
If you’re a European founder reading this, make no mistake: bootstrapping will teach you ten times more essential skills than traditional VC-funded routes ever will. It’s not glamorous, but it builds resilience, autonomy, and real value.
The Female Founder Perspective: Changing the Narrative
Let’s talk about why this issue matters to women entrepreneurs. Europe’s startup ecosystem is especially harsh for women. Female founders already face challenges accessing networks, competing for funding, and validating their ideas without mansplained condescension. The last thing we need is to convince female founders that VC dependency is the only credible route to success.
When I created Fe/male Switch, my goal wasn’t just to empower women; it was to dismantle barriers. Women don’t need more inspiration. They need solid infrastructure, mentorship from real operators, and systematic skill-building. That’s why I encourage women to bet on themselves. Want an incubator? Build one with AI. Want mentorship? Get peers on platforms like Reddit or X instead of traditional consultants.
- Bootstrap-first mindsets: Women entrepreneurs excel when they’re allowed to experiment on smaller, lower-pressure scales.
- Learn everything yourself: Whether it’s SEO, testing AI tools, or marketing, mastering these early allows you to hire intelligently later.
- Elevate zero-code: It’s a game-changer for women who don’t traditionally come from tech backgrounds.
Startup culture doesn’t need to be about unicorn hunting. It can be about building better systems, matching missions with market realities, and stopping ourselves from glorifying unsustainable growth models. Women can, and should, lead this charge.
What I Tell Founders Wondering, “Should I Take Funding?”
If founders come to me asking whether they should dive into funding rounds, my advice is almost always the same: Don’t do it unless you’re clear on your exit strategy. Before chasing funds, ask these three questions:
- What stage are you at? Funding a pre-revenue startup is often a red flag unless you’re solving massive technical challenges.
- What are you optimizing for? Is it impact, revenue, or the network that VC funding brings? Be brutally honest.
- Do you really need the money? If you can self-sustain with smaller, immediate revenue wins, prioritize that instead.
The funding system has many flaws. Let’s stop treating it like a badge of honor. Europe’s startup scene improves when we learn to fail faster and bootstrap better. That’s not a lack of ambition, it’s sustainable entrepreneurship.
So, founders, this is your call to action: Stop chasing unicorn status, and start building. Let’s prove Europe doesn’t need more zombie startups. It needs more resilient ones.
People Also Ask:
What is the scaleup Europe fund?
The Scaleup Europe Fund is a multi-billion euro initiative designed to invest in promising European companies. It focuses on strategic tech sectors like artificial intelligence, quantum technologies, semiconductors, robotics, autonomous systems, energy solutions, and space technologies.
How big is the scale-up Europe fund?
The fund has a target volume of five billion euros. Over half of this amount has already been committed, with key founding investors such as Novo Holdings participating alongside the European Commission.
Why is Europe’s Scaleup Fund controversial?
Critics say Europe’s Scaleup Fund might lead to ‘zombie’ companies, businesses that persist despite lacking significant growth potential. Concerns focus on the effectiveness of fostering genuine innovation versus sustaining underperforming ventures.
What are zombie companies?
Zombie companies refer to firms that operate without meaningful growth or innovation, surviving largely through external financial support like grants or subsidies, rather than sustainable business models.
How does the unicorn concept relate to the Scaleup Fund?
Unicorns are startups valued at over one billion dollars that demonstrate significant growth and innovation. Some worry the Scaleup Fund could fail to create unicorns and instead result in maintaining zombie companies.
Are there any success stories linked to the Scaleup Europe Fund?
While the fund aims to support high potential ventures, its overall impact is still being debated. Success stories depend on the ability to identify and nurture truly innovative companies within its portfolio.
What industries does Scaleup Europe Fund prioritize?
The fund focuses on cutting-edge industries such as artificial intelligence, quantum computing, energy technology, robotics, semiconductors, and space tech, aiming to bolster Europe’s competitiveness globally.
Who are the key contributors to the Scaleup Fund?
The fund receives contributions from various stakeholders including the European Commission. Novo Holdings has also been named as a significant founding investor alongside other unnamed participants.
How does the Scaleup Europe Fund aim to foster innovation?
The fund seeks to provide substantial resources for late-stage and growth startups in tech sectors, supporting them in achieving breakthroughs that compete on an international scale.
What challenges does Europe’s Scaleup Fund face?
Challenges include concerns about enabling zombie companies, ensuring efficient allocation of resources, and navigating the balance between fostering innovation and sustaining struggling enterprises.
FAQ on Europe's €5B Scaleup Fund and Sustainable Entrepreneurship
What risks does Europe face with late-stage funding emphasis?
Late-stage funding may inflate valuations without addressing systemic issues like commercialization hurdles, creating zombie startups. A healthier focus is early-stage infrastructure and agile exit strategies. Explore challenges in Europe’s AI innovation landscape.
Should startups prioritize bootstrapping over VC funding?
Bootstrapping teaches resilience, faster validation, and efficiency in scaling compared to VC reliance, which can encourage unsustainable experimentation. Dive into the Bootstrapping Startup Playbook.
How do commercialization barriers affect European startups?
These barriers slow innovation by complicating scaling and stagnating growth. Addressing regulatory complexity and enabling agile market exits can significantly improve startup scalability. Gain insights from Balkan startup case studies.
How can AI tools help founders bootstrap smarter?
AI tools like no-code platforms reduce startup costs and accelerate MVP development, allowing founders to test market fit quickly and cost-effectively. Discover how AI automates startup scaling.
Why is cultural risk aversion a key issue in Europe’s innovation ecosystem?
Risk aversion impedes founders from embracing failure as a stepping stone, unlike Silicon Valley’s mindset. Changing perspectives on failure can boost agile pivots and commercial success. Learn from Europe’s unicorn-focused strategies.
What role can female founders play in redefining startup culture?
Female founders can lead sustainable growth by adopting bootstrap-first approaches and elevating tools like AI and no-code for smarter scaling. Explore actionable frameworks in the Female Entrepreneur Playbook.
How can European founders avoid overfunding pitfalls?
Being strategic about funding rounds and focusing first on small, revenue-generating models prevents inflated valuations and dependency on external investors. Discover critical insights into EU funding.
How does the Scaleup Fund affect Europe's deep-tech sectors?
While the Scaleup Fund targets AI and biotech, structural inefficiencies may hinder the commercialization of innovations, risking stagnation. Learn how Europe’s AI clustering drives competitive edge.
Why should founders rethink VC funding dependency?
VC funding can steer founders away from sustainable practices toward inflated valuations and unrealistic growth. Bootstrapping offers control and priority on real-market value. Read: VC Funding Is the New Corporate Job.
What strategies should early-stage startups use for sustainable scaling?
Prioritize smart resource allocation, AI-driven automation, and local network collaborations to navigate funding constraints effectively while minimizing overhead costs. Explore lessons from Europe’s $1 Billion scale-up successes.
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the “gamepreneurship” methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the point of view of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
