A new legislative proposal from the European Commission aims to stop European startups from taking their best ideas elsewhere. The European Innovation Act would address the financing barriers and regulatory patchwork that routinely push founders to scale their ventures in other markets.
The proposal sits at the core of the EU Startup and Scaleup Strategy and the bloc’s Competitiveness Compass. Brussels has framed the legislation as essential for securing long-term prosperity and technological independence. Commission officials paint a stark picture: Europe produces world-class research and talent, yet innovators confront different rules in every member state and struggle to raise capital. Ideas born in Europe too often become commercial successes overseas.
The Act targets two specific obstacles. First, it tackles intellectual property financing. Startups frequently own patents, know-how, and other intangible assets that prove difficult to value, which discourages investors. A common EU framework for IP valuation would change that. A new digital marketplace would connect IP buyers and sellers, with expert guidance available to help companies commercialize. Commission estimates suggest annual savings of €35 million in administrative costs, plus €10.2 billion in additional financing through IP-backed venture debt and venture capital.
Meanwhile, the Act simplifies public procurement for research and development. A unified EU procedure would give companies legal certainty and accelerate market entry for technologies in health, education, and clean mobility. Joint procurement across member states becomes easier. Projected savings reach €1 billion annually for public buyers, while companies stand to gain €25.92 billion in extra yearly profits.
A companion proposal covers regulatory sandboxes, controlled environments where companies and regulators test new technologies under supervision. Current fragmentation across the bloc has created uncertainty. The new framework would establish shared EU standards for sandboxes not yet covered by existing legislation.
Startups Commissioner Ekaterina Zaharieva described the package as an opening move, with further steps planned toward a single innovation market by 2028. Both proposals now move to the European Parliament and the Council for negotiation.
