On Friday, the European Union proposed a new framework of rules for startups. Member states will adopt these rules in a bid to catch up with the U.S. and China whose economies have flourished with the setting up of successful startups specifically in tech.

In the U.S. Google. Facebook, Apple, Amazon and a host of others began as startups, in garages, with small operations and now have become tech giants. In China Alibaba, Tencent, Huawei and Xiaomi also started small and are much ahead of their European counterparts.

Recently, 25 countries across the E.U. have signed up and only three Hungary, Bulgaria and Croatia have not as yet signed up. Over a period of time, the countries who have signed up will have to amend rules that will fit in with the proposed set of rules.

The EU Start-up Nations Standard asks countries to make changes in their rules mainly on two issues: stock options and immigration visas. When these two major issues are resolved, countries can attract the best talent from different parts of the world.

The Standard also said that that startups in the EU also need “favorable and fair conditions to grow at every stage of their life cycle.”

This week, many European start-up executives as well as venture capitalists applauded the EU’s proposals saying that they will attract the best global talent and it has also been called a step in the correct direction.

Venture capital firm Atomico said that European startups had motivated investors to give them more than $41 billion in funds in 2020. This amount was a new record for annual tech investment. It also came in the year of the coronavirus pandemic, despite the overall economic impact of COVID-19 in the European Union.