🇪🇺 How to build a European incubator in 2026 - #2 Minimal public funding
While pondering how I would build a proper startup incubator in 2026, a few principles immediately came to mind. The first one we already discussed was letting go of the local binding to a city. Trying to make Madrid or Berlin the next Silicon Valley is rather clueless in the European context (it always was), as it kills a core EU strength for startups from the get-go:
Philippe MEDA
Step two would be letting go of this perpetual chase for public money, which always has been priority number one for 98% of incubation initiatives in Europe.
Where would the money come from?
Don't get me wrong, the question of who finances the program matters at least as much as what the program does. Amusingly enough, it's the same issue with corporate incubators: the most reliable signal of a serious innovation program is that money comes from parties with a direct financial interest in its success. In a cross-European incubation program, the co-financing parties are not bound to any national system. They can be a consortium of corporations across the same industry, facing identical structural problems, for which coordinated investment in external innovation is considerably more efficient than five parallel internal programs producing redundant outputs.
The European automotive sector is the clearest current case. Stellantis, Renault, Volkswagen, and BMW are simultaneously facing insurmountable odds (insurmountable because they spent 15 years actively disregarding crystal-clear market signals and only realized, seemingly a week ago, that China was taking the lead – but let's not get into that today). In 2026, working on battery technology, trying to become software-first, rebuilding operational efficiency from the ground up, and looking for business model innovation in mobility services will not happen for them while their DNA is still 80% mechanical engineering. It's even too late for internal nudges and pushes through the internal innovation program. They need a full-on cross-European program attracting top startups that would actually move the needle. These startups would have immediate access to multiple corporate clients, real procurement relationships, and a route to scale that no single-sponsor program can offer.
A jointly funded European automotive innovation program, financed in proportion by four or five OEMs and structured as an independent entity with a real ROI architecture, would be a fucking game-changer. Now think defense systems, digital sovereignty, green energy, mobility, medical care, or agriculture (!), and we would have a dozen hyper-focused networks, probably 80% self-funded by mid-2027. And no, I'm not naive. I understand that we will have quite a few struggles to overcome, as collaboration is mostly a fuzzy concept in Europe rather than an obvious cultural trait. But still.
The 28th Regime as a regulatory chassis
Another problem would be finding the right structure. The consortium model should be the obvious choice, but it can't really function efficiently when startups incubated are born into one of 27 different national regulatory frameworks, each with its own fiscal status, social obligations, IP rules, and corporate formation logic.
Cue in the 28th Regime, which addresses this directly. The broad idea is that, rather than asking member states to harmonize with one another, you create a voluntary supranational option that sits alongside the existing 27, which participating states agree to recognize. A startup incorporated under the 28th regime is domiciled in Europe, not in any particular country. This 28th regime has now been formally proposed by the European Commission as EU Inc. on 18 March 2026, with 48-hour registration, digital-by-default, and no minimum share capital requirement.
On paper? Amazing. Then again, it's Europe and the current draft defers legal interpretation to national courts and relies on national registries rather than a true European register (which obviously risks producing 27 divergent readings of the same instrument, recreating the very fragmentation the regime was designed to remove). In any case, the Commission wants agreement by Parliament and the Council by the end of 2026, with the regime effective by 2028. But this is an unusually tight timeline for European bureaucracy, and it would be 100% aligned with our suggested incubation format.
A modern financial vehicle
The final piece of the financial puzzle would be a purpose-built investment structure. What is needed is a pan-European innovation investment vehicle with three specific characteristics:
- Accessible to private investors at meaningful ticket sizes below institutional minimums, so family offices and mid-sized corporates can take innovation exposure without committing to a traditional VC fund structure;
- Qualifying for existing EU and national fiscal incentives for innovation investment, which currently apply in nationally siloed and mutually disconnected ways;
- And structured with a co-investment mechanism alongside EIC Fund or EIB instruments, so that private capital deployment triggers matched public funding rather than competing with it.
The French FCPI (Fonds Commun de Placement dans l'Innovation) is the closest existing model, but, unsurprisingly, it operates only at the national scale, with national incentives and no structural connection to a European corporate co-financing layer. A European FCPI, harmonized across five or six member states with standardized fiscal treatment and an explicit mandate to co-invest alongside corporate consortium funding, would be genuinely new, though it would not require new public money so much as a rerouting and coordination of instruments that already exist but currently cancel each other out through fragmentation.
This would really unlock the full potential of a modern incubation structure, thought from the ground up to scale projects in Europe. For now, the vehicles for aggregating people and tech on a European scale have yet to be built.
And we're still thinking in terms of incubation and initial market entry in this series of articles, but our proposal here would also begin to address the startup endgame. As Julien Petit recently noted in his study and report on European "unicorns", out of the 38 identified French unicorns, 9 have already relocated their HQs to the US. This shouldn't be the default way to scale in Europe, a 450+ million people market, more stable, vibrant, and diverse than the US.
