Earlier quoted context omitted.
I have seen (and worked in) a number of startups that did receive research grants including AI research in Germany. This notion of terrible European bureaucracy is exaggerated. It’s not worse than anywhere else in the world.
I've helped the EU Funds departments at my previous employer with auctions participation and other similar checkbox ticking exercises, they're impossible to navigate for regular companies. I suppose the amount of red tape depends on the type of grant. In my case, I once helped with national level grants to enhance the border protection systems, deployment throughout an entire country. The amount of time and effort to…
Generally startups should not be in government supply chain unless it is explicitly permitted / requested. They are by definition too risky for public to rely on their services, so it's ok that they cannot pass the checkbox ticking exercise. In rare cases where their presence is desirable (e.g. to boost innovation or find radically new solutions), government can always step in and offer them sherpa service (as it usually happens) to go through the paperwork.
Whether the whole regulation is necessary, is another question. I think it does, but the process must be more cost-efficient. It can be. I have seen in some places how the government has put focus on bureaucratic efficiency and it worked, but that often means a strategic horizon of a few decades, which is not within the reach of most democracies today: you need a stable government and public consensus.