Europe must overcome fragmentation to scale startups, says expert

Regulation must keep pace with fast-moving startups, says Kruczkowska Europe’s innovation ecosystem must address persistent fragmentation and strengthen cross-border coordination if startups are to grow into global scale-ups, according to director of innovation development at the Polish Development Fund Eliza Kruczkowska. Speaking to the Cyprus Mail on the sidelines of the 2026 European Innovation Council Summit in Brussels, Kruczkowska said the continent has made significant progress in supporting entrepreneurship but still struggles to operate as a unified innovation space. Kruczkowska, who has spent more than 15 years working across venture capital, public policy and startup ecosystem development in Poland and across Europe, said the summit provided an important opportunity to engage with stakeholders from across the continent. “It’s always very useful to meet people from all over Europe,” she said. “Having this dialogue will help us think above our national interest, and I do enjoy this mixture of different opinions and different angles.” She added that the conversations at the summit reinforced the need for deeper European collaboration beyond national frameworks, particularly as global competition intensifies. Reflecting on the state of Europe’s innovation landscape, Kruczkowska said one of the most significant barriers to progress remains the continent’s internal fragmentation and difficulty in acting collectively. She argued that Europe has made substantial progress over the past decade in building institutions that support startups, but said the challenge now lies in strengthening a shared identity and direction. “Lots of good things happen. That was a great wake-up call for us and maybe motivation to be faster,” she said, referring to comparisons often drawn between Europe and the United States. Kruczkowska said that 15 years ago, discussions around startups at European level policy forums were still limited, with most focus centred on research and development and universities. “For the last 15 years we have really made huge progress, and those institutions on the European level are very crucial because they think above national interest,” she said. However, she warned that the concept of a unified “Team Europe” approach remains difficult to embed in national political contexts. “It is very challenging to convince people back home that there is Team Europe,” she said. “Who is leading Team Europe? What does it mean?” She added that Europe’s global position should be seen as a strength rather than a weakness, particularly in terms of societal balance and quality of life. “When you look at the globe, you really feel that Europe is your home,” she said. “Europe is a really great place to live. It is a safer place, and we really care about the whole society.” While acknowledging that Europe is often perceived as slower-moving than the United States, she argued that this reflects a different value system rather than a structural flaw. “They can laugh that we are slower because of that, but the question is what is more important in your life,” she said. “We have in Europe this sense of balance.” Turning to Poland’s rapid development in the technology and innovation space, Kruczkowska highlighted the role of targeted public investment and institutional design in accelerating growth. She pointed to the creation of the Polish Development Fund as a turning point in expanding access to venture capital and supporting early-stage innovation. “Ten years ago, we launched a new institution called the Polish Development Fund,” she said. “It boosted access to capital. Before that, nobody really knew what venture capital was and how to get funding.” She explained that the fund helped establish the region’s largest fund-of-funds structure in Central and Eastern Europe, while also supporting venture capital firms and early-stage companies. Kruczkowska said the ecosystem now supports companies from research and development spin-offs to startups raising up to €15 million or more in later-stage funding rounds. “We started to educate the market and run tenders for new venture capital funds,” she said. “Now we are the biggest investor in the region.” Beyond financing, she stressed the importance of accelerator and venture-building programmes in identifying talent and supporting product development. She said these initiatives have helped create a growing number of visible success stories that now serve as role models for younger entrepreneurs. Among those she highlighted were companies such as Iceye, which develops microsatellites, and ElevenLabs, which has gained international recognition in artificial intelligence voice technology. “We finally started to have success stories,” she said. “Those stories inspire younger generations.” Kruczkowska also drew on international experience, recalling a visit to Israel during the early stages of Poland’s startup policy development. She described a conversation with a taxi driver who explained how attitudes towards entrepreneurship had shifted over time. “Every mother in Israel wanted her child to be a doctor or a lawyer,” she said. “Now every mother wants her child to be a startup founder.” She said this cultural shift demonstrated how role models can reshape national ambition and expectations. Addressing the long-standing tension between regulation and innovation, Kruczkowska said policymakers must accept that business development typically moves faster than legislative frameworks. “Business is always faster than regulation,” she said. “Regulators are always going to chase trends and try to adjust to them.” She argued that the priority should not be eliminating this gap, but ensuring that regulatory systems are responsive, flexible and grounded in dialogue with entrepreneurs. More important than speed alone, she said, is the quality of engagement between policymakers and the innovation community. “What is more important is that they do it fast and make business easy,” she said. Kruczkowska emphasised the need for structured dialogue and mutual understanding between those creating regulation and those affected by it. “This kind of creating dialogue and empathy between those who make law and those who need to follow it is the most important,” she said. She said events such as the EIC Summit play a valuable role in enabling direct exchange between startups, academia and policymakers, allowing institutions to better understand the realities of building and scaling businesses. “Listen, adjust and help,” she said, describing what she sees as the ideal policymaking approach. Kruczkowska also addressed how smaller European ecosystems can better integrate into the wider innovation landscape, stressing the importance of international connectivity from the earliest stages of company development. She pointed to Estonia as a leading example of a country that has built a globally oriented startup ecosystem despite its small size. “They do not think about a local market from day one,” she said. “They think about scale-ups.” She said Estonia’s approach is built on digital infrastructure, English-language accessibility and strong international integration, which has enabled startups to scale beyond domestic limitations. Kruczkowska added that this model has proven attractive even to companies outside Estonia, with some Polish startups choosing to incorporate there due to simpler regulatory conditions. In contrast, she said, larger markets can sometimes unintentionally limit entrepreneurial ambition by encouraging companies to focus domestically for too long. In Poland’s case, she noted that the size of the domestic market can create constraints on early international expansion. “The local market is not enough,” she said. “Everything is digital, everything is English, and they are very well connected with different ecosystems.” She argued that smaller countries such as Cyprus may, in fact, have a structural advantage in building globally oriented startups, provided they focus on early internationalisation and regulatory simplicity. Kruczkowska’s remarks at the EIC Summit highlighted a consistent theme across Europe’s innovation debate, the need to reduce fragmentation, improve regulatory responsiveness and encourage global thinking from the earliest stages of entrepreneurship. As she put it, Europe’s strength lies not only in its technological potential but in its ability to balance economic growth with broader societal values.