Chips Act II: European Start-ups Need Faster Funding and Less Red Tape

As chip shortages persist and global competition intensifies, the European Commission is expected to publish its Chips Act II proposal on May 27, aimed at strengthening Europe’s semiconductor ecosystem. According to an investor, the act will only succeed if it creates faster and more commercially oriented conditions for chip companies – an approach that should also apply to other deep tech start-ups.

The proposal builds on the European Chips Act, which entered into force in September 2023, and, according to the Commission, catalysed more than €80 billion in investments in chip manufacturing capacity. Despite that, industry representatives and policymakers note that current advancements are not enough, as the US and Asian economies continue to expand their own semiconductor capabilities.

According to Daiva Rakauskaitė, managing partner at Aneli Capital, the success of the initiative will depend heavily on whether Europe can handle bureaucracy and fragmentation across EU countries.

“Europe can significantly improve its attractiveness for chip companies by making investment conditions faster and more predictable. Semiconductor projects operate on short innovation cycles and require major upfront capital, so delays in permitting, fragmented state-aid processes and high compliance costs directly weaken competitiveness,” she says.

Currently, Europe accounts for roughly 10% of the global semiconductor market, while the Chip act aims to double that share to 20% by 2030. By this time, the value of the global chip industry could reach $1.6 trillion, according to the latest McKinsey estimates.

The growing demand for chips has recently encouraged European investors to show greater interest in the industry. According to PitchBook, European semiconductor start-ups raised a record €972 million in 2025, while funding in the first quarter of 2026 had already exceeded €380 million.

More broadly, investors are increasingly supporting hardware start-ups because hardware companies in areas such as semiconductors, robotics and quantum technologies are harder to replicate than software-as-a-service AI solutions, PitchBook notes.

However, according to Rakauskaitė, stronger investor interest does not automatically solve Europe’s main bottleneck: faster pathways to commercialisation.

A recent Dealroom Deep Tech report shows that Europe is home to 30% of the world's top deep tech universities and produces twice as many science and engineering graduates as the US. Yet Europe still struggles to convert its scientific strength into scaled companies, with nearly 40% of deep tech unicorns with European founders based in the US.

“Many young European deep tech companies face a difficult middle stage between research funding and commercial revenue,” Rakauskaitė says. “Semiconductor start-ups in particular need expensive prototyping, testing, certification and customer qualification before they can scale. Improving pathways to commercialisation would help more deep tech companies grow and strengthen the European ecosystem”.

Another significant issue for deep tech start-ups remains Series B+ funding. According to Dealroom, Europe is expected to see several €1 billion-plus funds that could support deep tech companies.

Still, according to Rakauskaitė, systemic changes are needed, including more flexible public-private financing, faster state-aid approvals, stronger pension-funds participation in venture capital.

Get in touch

Konstitucijos pr. 18B, Vilnius, Lithuania

Address

Fund management company – Aneli capital UAB, operating in accordance with the Law on Collective Investment Entities for Informed Investors of the Republic of Lithuania and permit No. 16 issued by the Bank of Lithuania on 3 September, 2018. Currently manages two funds.

Business angels fund II IISUTIB operates according to the closed-end investment company activity permit No.15 issued by the Bank of Lithuania on 22 October, 2018. The fund is partially financed by the European Regional Development Fund for 2014-2020, administered by UAB Ilte, and fully invested in parri-passu basis with private investors.

Aneli Venture Capital fund IISUTIB operates according to the closed-end investment company activity permit issued by the Bank of Lithuania on 5 November, 2025. The Fund invests under the financial instrument "Venture Capital Fund III", co-funded by the European Union from the Innovation Promotion Fund managed by ILTE, supported by the European Regional Development Fund (ERDF) and private investors.