Washington – The European Union’s Digital Markets Act (DMA) targeting leading U.S. firms did not spur European startup creation or growth, and may have harmed the entrepreneurs it was supposed to help, according to a new study from the CCIA Research Center.
The study, An Analysis of the Performance of European Venture Capital-Funded Startups, examines exit data for 2,276 European venture-backed companies from 2015 through 2024 and finds that 70 percent exited through acquisitions, compared with 6 percent through initial public offerings, while 24 percent shut down. Key findings include:
- There was no “Kill Zone” problem for the DMA to solve. European VC activity grew steadily through 2021, with deals doubling from 7,400 in 2015 to over 15,000 in 2021.
- The DMA eliminated acquisitions by targeted companies. The seven companies targeted as “gatekeepers” under the DMA made zero acquisitions of European venture-funded startups in 2023 and 2024, a sharp drop from years prior to the DMA.
- IPOs did not increase. The data show no increase in European IPOs post-DMA. IPOs were just 6% of exits, and most startups are far too small to IPO successfully.
- VC investment in startups declined after DMA implementation. European venture capital investment fell 37% from 2022 to 2024 even as global stock markets rose 40%.
- New founders bore the brunt. Restricting acquisitions was followed by tighter VC funding standards that made it more difficult for new entrepreneurs to get backing.
The following can be attributed to Trevor Wagener, Chief Economist and Research Center Director, CCIA:
“The data is clear: the supposed ‘Kill Zone’ that European regulators set out to fix with the DMA was a myth, but the funding drought that followed the DMA is very real. When policymakers make acquisitions harder for U.S. companies, they do not manufacture more startup IPOs.”
