EU's Tech Fund Aims to Stem Brain Drain as Giants Consolidate Markets

Europe's giants still rule as startups struggle to crack the Fortune 500

European corporate titans continue to dominate the continent's economic landscape, even as startups grapple with scaling amid a fragmented funding environment. While legacy firms like Sopra Steria Group and Séché Environnement report mixed but resilient performances, the European Union is doubling down on a €5 billion fund to nurture homegrown innovation. Meanwhile, strategic acquisitions and cost-cutting measures are helping established players maintain their grip on markets, leaving startups in the shadow of entrenched competitors.

Sopra Steria Group, a French IT services giant, reported a 2.9% organic revenue decline in Q3 2025, citing delays in UK defense contracts, according to its Q3 2025 revenues release of €1,315.8 million. However, the firm maintained its full-year growth targets, signaling confidence in a Q4 rebound driven by aeronautics and public sector recovery. Similarly, Séché Environnement, a waste management leader, faced a 3.2% revenue dip in its hazardous waste segment due to circular economy constraints, per a Séché activity update. These results underscore the challenges legacy firms face in adapting to regulatory shifts and market volatility, even as they retain operational scale.

Startups, by contrast, remain starved of capital at critical growth stages. The EU's proposed Scaleup Europe Fund aims to bridge this gap by targeting investments in quantum computing, AI, and clean energy, Bloomberg reported, with €3 billion in commitments from entities like Denmark's EIFO sovereign wealth fund and Spain's Criteria Caixa; the fund's focus on rounds exceeding €100 million reflects a strategic push to retain deep-tech talent on the continent. Yet, hurdles persist: recent acquisitions like Apple's purchase of French AI firm Datakalab and AMD's acquisition of Finland's Silo AI highlight the exodus of European innovation to global tech hubs, according to the same Bloomberg coverage.

For incumbents, consolidation and efficiency drives are key. Clariane SE, a healthcare services provider, announced a cost-reduction program in France and Germany to streamline operations post-asset disposal in an earnings call transcript. The firm expects these cuts to boost EBITDA margins to 12% in 2025, with full benefits materializing in 2026. Orion Group, a Finnish pharmaceutical company, also reported record operating profits in Q3 2025, driven by strong insurance results and investment income in its Orion interim report. These moves illustrate how established firms leverage scale and financial flexibility to navigate macroeconomic pressures.

One standout exception is 80 Mile PLC, a UK-based energy company that secured multiple partnerships to expand its biofuels operations in Italy in an 80 Mile announcement. The firm's 100% ownership of the Ferrandina plant, coupled with tolling agreements with Fortune 500 energy groups and Italian firms, positions it as a rare startup scaling through strategic alliances. Eric Sondergaard, 80 Mile's managing director, noted the agreements validate Ferrandina's role in Europe's renewable fuels transition, the PR Newswire release said.

Despite these efforts, Europe's innovation ecosystem remains fragmented. Visa's Q4 2025 earnings call highlighted robust cross-border e-commerce growth across the continent, yet the company's expansion in stablecoin and tokenization initiatives underscores the reliance on external fintech trends rather than homegrown startups. Meanwhile, Hanza AB's acquisition of Milectria and BMK—two contract manufacturers for defense and electronics—highlights how even mid-sized firms are consolidating to meet sector-specific demands, as discussed in a Hanza earnings call.

As the EU's tech fund gains momentum, its success will hinge on aligning with private-sector priorities and retaining talent. For now, Europe's corporate giants continue to set the pace, while startups navigate a landscape where scale and capital remain elusive.