EU Nations Proposed New Startup Viability Standards
A coalition of 11 countries wants to change how startups are classified to prevent them from being labeled non-viable.
Updated on Sept. 24, 2026 in Startups
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Eleven EU member states have submitted a joint statement to the European Commission seeking to revise the definition of Undertakings in Difficulty (UID). The proposal aims to fix classification issues for startups and scale-ups before the Commission implements a new definition in 2027.
Why it matters
Current definitions mistakenly categorize growing startups as non-viable businesses, which limits their access to necessary financing and support. Correcting this is a central push by the coalition to strengthen European innovation capacity and economic competitiveness.
A coalition of 11 EU nations is pushing for these regulatory reforms, which seek to address how the bloc classifies business viability for startups compared to traditional commercial benchmarks.
The players
European Commission
The executive branch of the European Union responsible for proposing and enforcing legislation across member states.
Heleen Herbert
A government minister representing the Netherlands who led the coalition in discussions regarding EU business definitions.
Teresa Ribera
A European Commissioner responsible for navigating the regulatory adjustments requested by the member states.
Competitiveness Council
An EU body composed of national ministers who coordinate policies to enhance innovation and economic performance.
The details
The proposal focuses on integrating quasi-equity instruments into the UID definition to better reflect the financial structure of high-growth companies. By redefining these entities, the coalition aims to prevent them from being erroneously flagged as struggling firms, thereby easing regulatory burdens that currently hinder scaling efforts. The issue was formally brought to the table during the Competitiveness Council meeting in Brussels.
Timeline
Eight countries initially called for a UID definition revision in May 2026.
The Competitiveness Council discussed the definition on September 24, 2026.
The European Commission plans to implement a new UID definition in 2027.
Market Landscape
The push marks a significant challenge to the European Union's current Undertakings in Difficulty definition, which has long frustrated high-growth firms. It follows a pattern of member states seeking to modernize regulatory frameworks to better match the realities of modern venture-backed enterprises.
Operators in the innovation sector should monitor the 2027 implementation timeline for potential changes to capital access and compliance status. Businesses currently hampered by outdated viability definitions should track the ongoing Competitiveness Council proceedings for future qualifying criteria updates.
The takeaway
The move signals a growing political consensus that legacy business definitions are stifling the growth of modern startups. Operators should review their current company classification status to determine if pending European Commission shifts could resolve future financing or compliance friction.
Further reading
For more on the challenges facing new ventures in the region, visit our Startups section.
Live Poll
Should governments revise business viability rules to better support innovative startups and scale-ups?
