EU leading industries

Single market fragmentation also hinders SMEs’ access to finance. According to the 2023 EIB investment survey, EU firms interviewed faced greater chances of being denied access to external finance than their US peers (4 % against 1.3 %), regardless of their growth stage. This is due to the weak availability of venture capital in the EU: according to an IMF working paper, while US venture capitalists raised close to US$924 billion between 2013 and 2023, EU venture capitalists raised only US$130 billion. In addition to this imbalance, the report finds that venture capitalists investing in the EU have a preference for larger scale-ups: while 21 % of US scale-ups receiving venture capital have fewer than 350 employees, this is only the case for 8 % of EU scale-ups. Another finding shows that, 10 years after their establishment, EU scale-ups raise 50 % less capital on average than their US counterparts. This also results from EU venture capitalists’ smaller size, compared with their US counterparts. As a result, EU scale-ups relying on venture capital are more likely to resort to foreign investors.