Ursula von der Leyen opens her talk at Italian Tech Week by telling a thought-provoking story. It was 2007. Two high school friends, Marco Palladino and Augusto Marietti, found themselves in a small garage in Milan with the bare minimum of programming and an idea they considered a winner. For three years they traveled the length and breadth of Italy looking for funding. The answer was always the same: too young, too bold a project, too risky.

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So they packed their bags and left for San Francisco. It took just two weeks to find their first investor. Soon after, their startup Kong became a unicorn. By the end of 2024, with a valuation of $2 billion, it was appearing on the big screens of the Nasdaq Tower in Times Square. "It's incredible the talent we have in Italy and Europe," Von der Leyen said in Italian. "Sometimes, however, it is not enough.

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There is also a need for a conducive environment. I want a Europe that is up to your standards."

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Kong's story is not an isolated case. It is a symptom of a structural lag that is draining Europe of its best talent. And which the president of the European Commission intends to address with one of the most ambitious proposals to boost the Old Continent's competitiveness: the so-called "28th regime," a new optional legal framework that is expected to revolutionize the way innovative startups and SMEs operate in the Union.

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The European paradox: so much savings, so little investment

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The figures presented by Von der Leyen in Turin are eloquent. "The first problem, the most obvious one, is the lack of funding. And I will tell you something that will surprise you: there is no shortage of capital in Europe." European household savings reach nearly 1.4 trillion euros, compared to just over 800 billion in the United States. Yet something is not working: in Europe only 24 percent of household financial wealth is invested in equity, compared to 42 percent in the United States.

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The result? One-third of European unicorns end up leaving the continent. In Italy, although venture capital investments have increased by 600 percent in a decade, the number of unicorns remains small. "We cannot accept that our brightest talents are forced to leave in order to succeed," Von der Leyen sounded from the OGR in Turin.

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Fragmentation holding Europe back.

"We live in a time when a line of code can cross the continent in a millisecond, while the startup that created it remains stuck at the border," she said. The single market is fragmented. "Too often it is easier to expand on another continent than in Europe. Dealing with 27 different legislations and bureaucracies can become a nightmare."

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Turin's announcement: the 28th regime arrives.

It is in this context that Von der Leyen announced from the audience of Italian Tech Week the solution: "The Commission is proposing a completely new approach to change the way innovative companies operate across Europe: the 28th regime." The legislative proposal will arrive on the table in Brussels in early 2026.

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"I want it to be true for you what is true for a San Francisco startup scaling in the United States," he said looking at the young innovators present at the OGR. The 28th regime should allow European startups to operate across the EU with a single unified set of rules, no longer having to navigate 27 different national regulations.

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The president also announced other measures to support Europe's tech ecosystem: the Scaleup Europe fund, with multibillion-dollar investments in partnership with private individuals to support strategic sectors from AI to quantum technologies, and the "AI First" strategy to accelerate the adoption of artificial intelligence in Europe.

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But it is the 28th regime that is the proposal that could really change the rules of the game. "Certainly not by tearing up our legislation: these are agreed rules that provide certainty and predictability. But we need to simplify by facilitating innovation," Von der Leyen pointed out.

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From Dragons to Von der Leyen: the genesis of the idea

The idea of the 28th regime that Von der Leyen announced in Turin did not come out of nowhere. It is one of the central recommendations of the European Competitiveness Report that Mario Draghi presented in September 2024 at Von der Leyen's own request. The former ECB president and Italian premier had identified regulatory fragmentation as one of the main obstacles to the growth of innovative European companies.

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In his report, Draghi had pointed out the merciless fact that Von der Leyen would later take up in his speeches: there is no EU company with a market capitalization of more than 100 billion euros that has been created from scratch in the past fifty years, while in the United States success stories multiply. The problem? European startups face 27 different national regulations, a bureaucratic maze that slows growth and pushes many companies to move overseas.

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Enrico Letta, in his report on the single market titled "Much more than a market" presented in April 2024, had also proposed this solution: "This idea of the 28th regime or 28th virtual state is aimed at finding a compromise between the willingness of all member states to maintain their own regulations and the need for fast-track procedures for investment."

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The proposal has since found its way into the Commission's official programs. In his State of the Union address on Sept. 10 in Strasbourg, Von der Leyen included the 28th scheme in the Single Market Roadmap to 2028, alongside other goals such as the fifth freedom for knowledge and innovation.

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The Delaware model: the American inspiration

The inspiration for the 28th regime comes directly from the United States, and more specifically from Delaware. This small state on America's East Coast has created a regulatory system so business-friendly that 67 percent of Fortune 500 companies-from Walmart to Amazon, ExxonMobil to Apple-have chosen to incorporate there.

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The success of the Delaware model lies in its simplicity: a single set of rules, fast and efficient procedures, and low costs. A California startup can expand and raise funds throughout the United States without having to deal with 50 different state legislations. In contrast, as Von der Leyen herself admitted, "our innovative startups have to deal with 27 different regulations. We want to propose a 28th regime that will give them access to the entire single market and the opportunity to grow."

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What the 28th regime provides for

The 28th regime is not intended to replace national laws, but to offer a voluntary alternative. Innovative startups and SMEs will be able to choose to set up under this new European legal status, benefiting from:

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• A single set of EU-wide rules for corporate, bankruptcy, labor and tax law
• Quick establishment of a business in less than 48 hours
• Operate throughout Europe with one set of rules: hire employees in Germany, sell in France, open an office in Spain without having to adapt to new national regulations each time
• Standardization of employee stock options

The proposal, according to the Compass for Competitiveness presented by Von der Leyen, is expected to be formally advanced in the first quarter of 2026.

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The support of the tech ecosystem

The initiative has garnered support across the European tech ecosystem. The EU Inc petition, created in 2023 to promote the 28th scheme, has garnered tens of thousands of signatures and support from companies such as Stripe, Wise, Revolut and DeepL, as well as investors and venture capitalists such as Index, Atomico, Sequoia and Lightspeed.

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Supporters include prominent tech entrepreneurs such as Niklas Zennström (founder of Skype), Paul Graham (co-founder of Y Combinator) and Patrick Collison (Stripe). Ireland's justice commissioner, Michael McGrath, has been designated to lead the implementation work.

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The numbers of a delay we can no longer ignore

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The data presented by Von der Leyen in Turin and in his subsequent speeches draw an alarming picture of Europe's technological backwardness:

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• Unicorns: As of mid-2024, there were more than 1,400 unicorns (unlisted startups with a valuation above $1 billion) in the world. More than half are in the United States. Europe and China are stationary at 14 percent each.
• Talent drain: Over the past 15 years, about 30 percent of European unicorns have moved out of the EU, mainly to the United States, due to a lack of an adequate regulatory environment and sufficient funding.
• Capitalization: There is no EU company with a market capitalization of more than 100 billion euros that has been created from scratch in the past fifty years. Meanwhile, in the past two decades alone, the United States has spawned six technology companies with capitalization above this limit.
• Capital flight: Every year, 300 billion euros of European citizens' savings end up financing the U.S. capital market, which then-paradoxically-uses it to acquire European companies.
• Investment gap: In Europe, only 24 percent of household financial wealth is invested in equity, compared to 42 percent in the United States. European companies spend €270 billion less than U.S. companies on research and innovation.

"We know that the number of unicorns is still too small and that a third of them end up leaving our continent," Von der Leyen reiterated in Turin. "This is a warning sign that we cannot ignore."

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Implementation challenges

Despite broad political consensus, the road to the 28th regime will not be without obstacles. Past experiences, such as the"Societas Europæa" (European Society), have shown how difficult it is to create truly uniform legal instruments when 27 member states want to retain their legislative prerogatives.

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The key to success, according to experts, lies precisely in the voluntary approach: the 28th regime does not impose changes to national laws, but offers an alternative for those who want to operate on a European scale. It is a compromise that could work where other attempts have failed.

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A piece of the competitiveness strategy

The 28th scheme is part of the broader Compass for European Competitiveness, which aims to reduce administrative burdens for businesses by 25 percent and for SMEs by 35 percent. Von der Leyen said that "Europe has everything it needs to succeed in the race to the top. But at the same time, we need to correct our weaknesses to regain competitiveness."

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The strategy is based on the recommendations of the Draghi and Letta reports and includes other measures such as the Savings and Investment Union, artificial intelligence gigafactories, and action plans for advanced materials, quantum technologies and robotics.

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At the European summit in Budapest in November 2024, Von der Leyen had reiterated, "Innovative startups tell us that it is very cumbersome for them to enter the single market dimension because they often have to deal with 27 different regulations. With the 28th regime, they will be given access to the entire single market and will have the opportunity to grow."

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From Strasbourg to Turin: a coherent strategy

Von der Leyen's speech at Italian Tech Week on Oct. 3 came a few weeks after her State of the Union address in Strasbourg on Sept. 10, 2025, in which she had already announced her commitment to the 28th regime by incorporating it into a broader strategy.

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"As the Letta report points out, the single market remains incomplete, especially in three areas: finance, energy, and telecommunications," he said in Strasbourg, announcing a roadmap for the single market through 2028 that includes just the 28th regime along with the "fifth freedom for knowledge and innovation."

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Conclusions: an existential challenge for Europe

A year after presenting his report, Mario Draghi issued a clear warning: "Our growth model is fading. Vulnerabilities are increasing. And there is no clear path to finance the investment we need." For Draghi, Brussels' inaction could threaten Europe's sovereignty and economic competitiveness.

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The 28th regime represents a concrete response to this challenge. But as Von der Leyen said in Turin as he looked at the young innovators in attendance, "How many times have you been told that you were aiming too high? How many times did you think there was nothing more you could do? Yet, you are here. Not because you have never failed, but because you have always found the strength to get back on track."

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The message is clear: Europe has the talent, it has the capital, it has the skills. What it lacks is an integrated ecosystem that allows these ingredients to combine and generate globally competitive innovation. The 28th regime is a tool to build this ecosystem.

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"I want the future of artificial intelligence to be written in Europe," Von der Leyen concluded in Turin. "I want the best Europe to choose Europe." The story of Kong, of Marco and Augustus who had to cross the ocean to see their talents recognized, can no longer be repeated. That is the goal of the 28th regime: to allow the next Kong to be born and grow up here, in Europe, in their home.

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As Von der Leyen said in his State of the Union address, "This must be Europe's moment of independence. A moment we can seize if we are united." The 28th regime is one of the pillars on which to build this economic and technological independence.

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It remains to be seen whether Europe will be able to turn words into deeds before it is too late.

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Sources and references

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Official documents:

• European Commission - Speech by President von der Leyen on the State of the Union 2025 (Sept. 10, 2025)
• Mario Draghi - "The future of European competitiveness" (September 2024)
• Enrico Letta - "Much more than a market" - European single market report (April 2024)
• European Commission - Compass for EU Competitiveness (November 2024)
• European Commission - EU Startup and Scaleup Strategy "Choose Europe to Start and Scale" (May 2025)

Speakers and lectures:

• Ursula von der Leyen - Speech at Italian Tech Week, Turin (Oct. 3, 2025)
• Ursula von der Leyen - Press conference at the Budapest European Summit (November 2024)
• Mario Draghi - Conference "One Year After the Draghi Report," Brussels (September 2025)

Initiatives and movements:

• EU Inc - Petition for 28th European tax regime(https://euinc.org)

Articles and analysis:

• ANSA - "Innovation Law and 28th regime, EU strategy for startups coming soon" (May 2025)
• Stock Exchange&Finance - "EU Inc, what is the 28th European tax regime project" (Nov. 2024)
• EconomyUp - "What is the 28th regime and why it matters for European business innovation" (February 2025)
• Euractiv - "The 28th virtual state: a bridge to European economic integration according to Letta" (January 2025)
• StartupItalia - "Choose Europe to Start and Scale, how the European Commission's new plan works" (May 2025)

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