Three scaleups per one million inhabitants - the indicator that shows the underperformance of the national economy

Our country remains, still, a marginal player in the race to build the companies of the future, according to the most recent European Startup and Scaleup Scoreboard of the European Commission, which shows that Romania has only about three scaleup companies per one million inhabitants, almost three times below the European Union average, estimated at 8.1, and is at a huge distance from the leaders of the continent. The cited source shows that Ireland registers an indicator of 415.3, Sweden 354.7, and Denmark 274.3, differences that reflect not only the performance of entrepreneurial ecosystems, but also the capacity of these economies to transform innovative ideas into mature businesses, capable of conquering international markets.

For Romania, this statistic is more than an unfavorable ranking; It shows that the Romanian economy produces entrepreneurs and startups, but very few of them manage to cross the critical threshold between a promising idea and a company capable of generating hundreds or thousands of jobs, attracting investments of hundreds of millions of euros and becoming a relevant player on the European or global market.

This conclusion is all the more important as, in recent years, global economic competition has changed radically. If a decade ago, governments and investors were almost exclusively watching the number of startups founded annually, today the real stake is represented by the companies that manage to survive the initial phase and enter an accelerated development process. These companies are called scaleups and are considered, by economists, the true engine of the new economy. Unlike startups, which are still trying to validate their product and business model, scaleups have moved beyond this stage, demonstrated their economic viability and are entering a phase of rapid and sustainable growth in revenue, investment and employee numbers. In most cases, they are companies with an age of no more than ten years, but which have the potential to become, in a relatively short period of time, regional or even global leaders.

Their importance for the economy is enormous. OECD and European Commission studies show that, although they represent only a fraction of all newly established companies, scaleups generate a disproportionately large share of new jobs, private investment and productivity growth. They are the companies that buy new technologies, develop innovative products, export high-value-added services and attract international capital. For this reason, developed economies no longer only track how many new companies appear in a year, but especially how many of them manage to become big enough to change entire markets.

• Lack of funding, the main reason for blocking scale-up for start-ups

For our country, this change in perspective is essential. In the last decade, the local startup ecosystem has developed visibly: innovation hubs, business accelerators, investment funds and European funding programs have emerged, and more and more young entrepreneurs have started to build internationally competitive products.

However, very few companies manage to take the decisive step towards the scale-up stage. The problem is no longer a lack of ideas or a lack of technical talent, especially since Romania produces thousands of graduates in the field of computer science and engineering every year, and our specialists are appreciated in the world's major technology companies. The bottleneck occurs when a company needs substantial funding to quickly expand into foreign markets, to buy other companies, to open offices abroad or to invest heavily in research and development. At this stage, the Romanian ecosystem continues to be insufficiently developed.

The difference from European leaders is visible in almost every relevant indicator. Ireland, Sweden and Denmark do not necessarily produce more entrepreneurs than Romania, but they offer an environment in which innovative companies can grow much faster. Their capital markets are incomparably more developed, venture capital and private equity funds manage substantial financial resources, and collaboration between universities, research institutes and the private sector has been operating for decades.

Romania is not starting from scratch, but the gap remains significant. In recent years, several examples of companies have emerged that have demonstrated that international success is possible. UiPath has become the first Romanian unicorn and one of the most spectacular examples of global development starting from Central and Eastern Europe. Other companies such as FintechOS, DRUID AI, FlowX.AI, Bible Chat or Creatopy have attracted significant investments and built a presence in Western markets. However, their success remains the exception rather than the rule. In many cases, Romanian companies choose to move their legal headquarters to the United States, the United Kingdom or other European jurisdictions to have easier access to investors and more developed financial markets. Thus, the added value created by Romanian entrepreneurs is often accounted for in other economies.

This situation explains why our country continues to occupy modest positions in most European rankings on innovation and competitiveness. According to the European Innovation Scoreboard, our country is part of the "emerging innovators" category, i.e. the states with the lowest performance in terms of innovation. Research and development spending remains among the lowest in the European Union, private investment is limited, and the link between the university environment and the economy is still poorly developed. In the absence of a complete ecosystem capable of supporting the development of companies at all stages, many promising startups remain trapped in a modest growth area or choose to continue their development in other countries.

• Competitiveness of scale-ups, an important objective for economic development

In this context, the results of the latest report by the European Scaleup Institute take on a special significance. The analysis shows that between 2023 and 2024 the fastest growth rates were recorded by Latvia, Portugal and Greece, countries that, like Romania, were not part of the traditional core of European innovation until recently. The growth was reflected in particular in the expansion of the number of employees, a sign that the respective companies have entered an accelerated stage of development. At the opposite pole, Ireland, Luxembourg and Estonia recorded the most significant decreases in the growth rate. At first glance, the result may seem surprising, but it does not mean that European leaders are losing their competitive advantage. In reality, countries with mature ecosystems start from much higher bases, and very high growth rates are more difficult to maintain in the long term. In contrast, economies in a recovery stage can register spectacular growth starting from a relatively small number of companies.

This is precisely the paradox highlighted by European statistics. Latvia appears simultaneously among the countries with the fastest growth and among those with the lowest density of scaleups compared to the population. This demonstrates that a high annual pace is not enough to build a mature ecosystem. The critical mass of companies, access to capital and continuity of long-term investments also matter. From this perspective, Romania still has to recover not only a quantitative gap, but also a structural one, related to the way the economy transforms research, innovation and entrepreneurial spirit into large companies, capable of competing on the global market.

This transformation is not accidental, nor is it the exclusive result of private initiative. Behind high-performing ecosystems are coherent public policies, mature financial markets and consistent investments in research and development.

The Organisation for Economic Co-operation and Development (OECD) warns that European countries spend billions of euros annually on business incubators, accelerators, mentoring programmes and funding schemes for startups and scale-ups, considering that they represent one of the most effective tools for stimulating competitiveness, productivity and employment. In the organisation's opinion, the challenge is no longer to establish as many startups as possible, but to create the necessary conditions so that as many of them as possible can cross the critical stage of development and become companies capable of competing globally. The experience of the last decade shows that many European companies develop cutting-edge technologies, but too few manage to reach the size of giants such as Nvidia, OpenAI, SpaceX, Stripe or ByteDance, many being bought before maturity by American or Asian investors or choosing to move their headquarters to jurisdictions with easier access to capital.

• 5 billion euros to finance the scale-up of deep-tech companies

This issue has become so important that the European Union has begun to treat it as a matter of economic security and strategic autonomy. While two decades ago competitiveness was mainly associated with the automotive industry, the chemical industry or manufacturing, today economic advantage is increasingly determined by the ability of an economy to produce disruptive technologies and the companies that commercialize them on a global scale. Artificial intelligence, semiconductors, quantum computing, biotechnologies, energy technologies and the space industry have become areas in which economic competition is increasingly becoming intertwined with geopolitical competition. The United States and China are investing hundreds of billions of dollars in these sectors, and Europe is trying to catch up with the gap through a strategy that emphasizes the development of its own technological champions.

The European Commission's initiative to mobilize approximately five billion euros to support European companies in the scale-up phase, especially in the deep-tech field, must also be seen in this context. The objective is not only to finance promising companies, but also to keep intellectual property, research centers and the economic value generated by them in Europe. In recent years, many European startups have been forced to move their headquarters to the United States in order to have access to financing rounds of hundreds of millions of dollars, financing that is still relatively rare in Europe. Brussels is thus trying to reduce one of the continent's most important competitive disadvantages: the difficulty of transforming scientific excellence into global companies.

The data show that this change is already starting to have effects. According to the latest report by the European Innovation Council, companies supported by European programmes have attracted over euro15 billion in private investment, spawned new unicorns and completed numerous funding rounds exceeding euro100 million. Another important indicator is that around 80% of the investments made involve cross-border capital flows, which demonstrates that the European market is starting to function more and more integrated. For investors, this means access to a much broader base of innovative projects, and for entrepreneurs, the possibility of finding funding without being forced to move their businesses outside the European Union.

• Most scale-ups are in IT&C, support services and the energy sector

Another interesting conclusion from the European Scaleup Institute report concerns the economic sectors in which this growth is concentrated. At first glance, agriculture and fisheries recorded the fastest acceleration between 2023 and 2024, but a longer-term analysis shows a different picture. In the period 2020-2024, the most dynamic areas were information and communication technology, business support services and the electricity, gas and heat production sector. This evolution is not accidental. The digitalization of the European economy, the development of artificial intelligence and the transition to clean energy have generated an unprecedented demand for new technological solutions, and companies capable of responding quickly to these transformations have entered an accelerated development process.

The energy sector is perhaps the most spectacular example. The energy crisis triggered after Russia's invasion of Ukraine, combined with the European Union's climate objectives and massive investments in renewable sources, smart grids and energy storage solutions, have created the conditions for the emergence of a new generation of innovative companies. In just a few years, green energy technologies have moved from niche to strategic industry status. For Europe, this evolution has a double meaning: it contributes to reducing energy dependence and creates new competitive advantages on the global market.

For the central authorities in Bucharest, the real challenge is not to create yet another funding program or organize yet another conference on innovation. The stakes are to build a complete ecosystem, capable of accompanying a company throughout its entire journey, from idea to international expansion. This requires universities connected to the economic environment, research institutes oriented towards technology transfer, financial markets capable of mobilizing private capital, investment funds large enough to support accelerated development, and stable, predictable public policies oriented towards competitiveness.

Our country has creative entrepreneurs, high-performing engineers, and researchers capable of competing internationally. What is missing is the mechanism through which these resources can be transformed into large businesses, capable of exporting technology, attracting capital, and creating added value in the national economy. The approximately three scaleups reported per million inhabitants represent, in this context, more than an unfavorable statistic, but rather reflect the distance that still separates the Romanian economy from European states that have understood that the prosperity of the future will not be built around raw materials or cheap labor, but around companies capable of transforming knowledge into products, services and technologies with global impact.