Across the Ugly Duck discussions, one message was consistent. Europe does not suffer from a lack of ideas, talent or ambition. What holds us back are the conditions in which innovation capital is asked to operate.
When we aggregated the insights across workshops, a clear hierarchy of structural blockers emerged. These are not isolated issues tied to individual sectors. They are systemic constraints that shape outcomes across innovation, sustainability, health and competitiveness.
Taken together, they explain why Europe generates breakthroughs, but struggles to scale them into global industries.
The Overall Ranking: What Matters Most
Across all workshops, the following blockers ranked highest in terms of impact on Europe’s ability to scale innovation. This ranking matters because it reveals where friction is most acute and where change would have the greatest effect.
Overregulation and Fragmentation at the Top
Overregulation and EU fragmentation consistently emerged as the most significant constraints. In practice, they act as a double brake.
Regulation often arrives early, unevenly and with limited proportionality. At the same time, fragmentation forces companies and investors to navigate multiple regimes, standards and approval processes. The combination slows experimentation, delays deployment and raises the cost of capital.
This environment shapes day to day decisions about where to build, where to scale and where to deploy capital.
The Missing Middle: Scale Up Capital and Market Depth
The third and seventh ranked blockers point to a structural weakness in Europe’s capital markets.
Europe has strong early stage innovation, but insufficient depth at scale. Growth capital is limited, markets remain granular and funds are often too small to support companies through critical inflection points. As a result, companies that should become European champions are forced to look elsewhere for capital and ownership.
This is not a failure of performance. It is a failure of market structure.
Policy and Regulatory Design That Work Against Scale
Policy misalignment and regulatory and investment restrictions sit close together in the ranking for a reason. Ambition on paper is not always matched by coherence in execution.
Innovation capital is often constrained by rules that were not designed with long term, high impact investment in mind. Public investment, while essential, is frequently budgeted as a cost rather than treated as an asset that generates future returns. Conditions attached to public capital can unintentionally limit flexibility and scale.
The cumulative effect is hesitation. Capital waits. Scaling slows.
Capital Preferences That Do Not Match Europe’s Needs
The remaining blockers point to a deeper misalignment between Europe’s long term objectives and its capital allocation frameworks.
Investor preference for liquid assets and bias against equity reduce the pool of patient capital available for innovation. Performance evidence exists, but it is not always visible, comparable or trusted enough to overcome entrenched allocation habits.
This creates a paradox. Europe needs long duration investment to build future industries, but continues to incentivise short term liquidity.
What These Blockers Mean Together
Viewed individually, each blocker is familiar. Viewed together, they form a reinforcing system.
- Overregulation and fragmentation slow early progress
- Policy misalignment weakens confidence over long timelines
- Scale up funding gaps prevent value capture
- Capital preferences restrict patient investment
- Market granularity limits the emergence of champions
This is not a failure of innovation. It is not a failure of private markets. It is a failure of conditions.
Innovation capital can deliver outcomes at scale, but only when the environment allows it to operate with continuity, confidence and depth.
How the Blockers Differ by Theme
While the same structural blockers recur across all themes, their relative weight and implications differ materially. Looking across workshops allows us to see not just what the barriers are, but where they bite hardest.
Across all themes, two blockers are consistently present at the top: overregulation experimentation slows early and EU fragmentation scaling becomes complex.
What changes is the third constraint, which reflects the specific conditions needed to deliver outcomes in each area:
- scale up funding for tech leadership and competitiveness - Without sufficient growth capital, sustainability innovation remains fragmented, expensive and vulnerable to being scaled elsewhere.
- regulatory permission for security - Capital is willing, but rules governing who can invest, where and how often slow deployment. Strategic technologies suffer from a mismatch between urgency and process.
- policy coherence for human and planetary health - Solutions often depend on coordinated healthcare systems, infrastructure and public procurement. Fragmentation across countries and inconsistent policy signals create friction precisely where alignment matters most. The cost is delayed outcomes, not just delayed returns.
- capital mobility for financial markets - Here, the blockers are not about technology or science, but about how capital is allowed to move, how risk is measured and how long term investment is treated within regulatory frameworks.
This reinforces a central conclusion of the Playbook: Europe does not need entirely different solutions for each theme. It needs targeted adjustments to a shared set of structural conditions, applied with an understanding of where each theme is most sensitive.
The challenge is not complexity. It is coordination.
Each is shaped by the incentives, mandates and perceptions of specific stakeholder groups. Understanding who sits behind them is essential if Europe is to move from diagnosis to delivery.
This is not a failure of private markets. It is not a failure of public ambition. It is a failure of coordination.
Mapping Structural Blockers to Stakeholders
This chart shows how responsibility for Europe’s structural blockers is distributed across the innovation ecosystem. Each flow represents the relative contribution of different stakeholders to a given blocker. The width of each connection reflects where influence and leverage sit, not where blame lies.
No blocker originates from a single actor. Each emerges from the interaction between regulation, policy design, capital allocation and market practice.
What the chart shows
First, regulation and policy shape the system more than any other factor.
Overregulation and fragmentation sit at the top of the chart, with the largest flows connecting regulators and policymakers to these blockers. This reflects how precautionary rulemaking, national silos and uneven implementation slow experimentation and scale across every theme.
Second, capital allocation decisions determine whether innovation reaches scale.
The flows linking LPs to lack of scale up funding, preference for liquid assets and market granularity show how portfolio incentives, governance frameworks and liquidity bias constrain the depth of Europe’s private markets. Capital is available, but it is not structured to stay the course.
Third, some blockers are primarily coordination failures.
Performance evidence, transparency and market fragmentation cut across all stakeholders. No single group controls them, but every group contributes to their persistence. These are also the areas where progress could be fastest if action is coordinated.
What this means in practice
This mapping highlights a critical point. The structural blockers holding Europe back are not the result of individual decisions, but of misaligned incentives across the system.
- Regulators act to protect, but inadvertently slow scale
- Policymakers set ambition, but struggle with continuity
- LPs manage risk, but underallocate to long duration investment
- GPs build companies, but lack collective visibility and voice
Each position is rational in isolation. Together, they produce friction.
Why this matters
Understanding where influence sits allows us to focus on leverage, not blame. Some changes require regulatory redesign. Others depend on policy continuity, capital framework reform or better coordination within the market itself.
The value of this chart is that it makes responsibility visible. And when responsibility is visible, collective action becomes possible.
The sections that follow focus on how these stakeholders can realign around shared outcomes and create the conditions Europe needs to scale innovation with confidence.