Europe is good at creating ideas. The harder part is turning them into companies that can grow — and keeping those companies home once they do. Brussels now trying to close that gap with new rules designed to help turn research into commercial products and stop startups from seeking growth outside.

The European Commission has unveiled its new European Innovation Act. The initiative focuses on two areas Brussels sees as holding European innovation back. One is fragmented rules for public research and development (R&D) contracts. The other is difficulties turning intellectual property into financing. The Commission estimates the new R&D procurement rules could save public buyers €1 bn a year and generate €25.9 bn in annual profits. The Act is part of the EU Startup and Scaleup Strategy.

“With the European Innovation Act, we are tackling fragmentation head-on: one framework for IP valuation, one digital marketplace connecting buyers and sellers, and one simpler route for public procurement of cutting-edge research and development,” said Ekaterina Zaharieva, Commissioner for Startups, Research and Innovation. “By 2028, we will create a genuine single market where ideas scale faster, finance circulates more freely, and Europe’s strategic autonomy grows stronger,” she added.

Brussels wants public buyers to spend more

Europe’s R&D procurement market is worth around €17 bn a year. For Brussels, that is not enough. It accounts for only around 0.6 per cent of annual spending, while other economies spend five to eight times more. This means between three and five per cent of their spending.

Unlike normal procurement, where a public authority buys an existing product or service, R&D can be used when a solution still needs to be developed. The Innovation Act would create one set of rules across the EU, making it easier for public authorities to jointly commission new technologies.

We are tabling two packages – two major shifts for Europe’s economic leadership.

Our EU Innovation Act will help start-ups access finance and navigate the world of R&D procurement.

And we are revamping public procurement rules.

Making them simpler, clearer and more focused on… pic.twitter.com/HdfqNgBIm5

— Ursula von der Leyen (@vonderleyen) September 9, 2026

Companies would face proportionate financial requirements, tenders would focus more on what a technology needs to achieve rather than prescribing a solution, and bids would have to be assessed within two months. Brussels hopes this will give smaller and newer companies a better chance of competing.

Keeping European companies in Europe

The proposal comes as Brussels tries to tackle a persistent problem: Europe creates startups and research, but many of its most successful companies struggle to scale at home. Nearly a third of European unicorns have relocated abroad over the past 15 years, often because of difficulties raising funds. Later-stage venture capital investment stood at around $21 billion in the EU in 2024. The corresponding value was $133 billion in the US.

Fragmentation is another obstacle. European technology companies often have to navigate different markets across 27 member states. The Innovation Act also introduces an EU preference in R&D procurement. Tenders will be open to companies from EU countries, the European Economic Area and the Western Balkans. At least 50 per cent would have to take place in eligible countries. But these rules would not apply to defence.

Turning intellectual property into cash

The second major part of the Act targets intellectual property. A proposed a new Competence Centre within the European Union Intellectual Property Office (EUIPO) to help companies value patents and other intellectual property. It would also run an EU-wide digital matchmaking platform connecting IP holders with potential buyers, investors and companies interested in licensing their technology.

Brussels expects the measures to cut companies’ costs by around €35M and unlock €10.2 bn a year in additional financing. Overall, the Commission estimates that the measures could increase EU GDP by between 0.24 and 0.42 per cent over ten years. Besides it could contribute to more than half a million new jobs.

What happens next?

The European Innovation Act will now be examined by the Parliament and member states. Alongside the Act, the Commission is asking member states to agree on common principles for regulatory sandboxes. These are controlled environments where companies can test new technologies before bringing them to the market.