EUIPO Warns Europe Is Failing to Unlock Intellectual Property as a Financing Tool for Innovation

The European Union Intellectual Property Office (EUIPO) has released a comprehensive report assessing the role of intellectual property as a mechanism for financing innovative enterprises across Europe, arguing that the region is significantly underutilising one of its most valuable economic assets. The study, titled intellectual property-backed financing in Europe, concludes that although the European Union remains strong in research capacity, innovation output, and entrepreneurial talent, it continues to struggle to convert ideas into large-scale commercial success when compared with global competitors.

The report stresses that intellectual property rights—including trademarks, patents, and designs—are fundamental to the valuation of modern innovative companies, yet remain largely underexploited as financial instruments. It highlights that intangible assets now represent the majority of corporate value, but many firms are still unable to leverage their intellectual property portfolios effectively when seeking external financing. These limitations are attributed to fragmented capital markets, structural inefficiencies within the single market, and persistent barriers that prevent intellectual property from being widely accepted as collateral.

According to the findings, industries intensive in intellectual property account for approximately 48 per cent of EU gross domestic product and around 31 per cent of total employment. Despite this economic weight, only 13 per cent of companies holding intellectual property rights have attempted to use them to secure financing, and most have never undertaken a formal professional valuation of these assets. The report links this gap to both limited awareness among businesses regarding how to monetise intellectual property and a lack of expertise among financial institutions in accurately assessing such intangible assets.

The EUIPO warns that these shortcomings are widening the competitive distance between Europe and other major economies, particularly in innovation-driven sectors. It also notes that financial and structural constraints are increasingly encouraging high-growth companies to relocate their headquarters outside the European Union in search of more supportive financing environments. The report frames this trend as part of a broader competitiveness challenge affecting Europe’s ability to retain and scale its most promising enterprises.

In statements included in the report, EUIPO Executive Director João Negrão emphasized the strategic importance of intellectual property in connecting innovation to markets, saying: “Trademarks and other intellectual property rights are not an end in themselves they connect ideas to markets, helping businesses bring innovation to those markets.” He further stated: “Given that intellectual property assets now represent an increasing share of corporate value, it is essential to ensure a suitable financial environment for businesses, especially innovative small and medium-sized enterprises, start-ups and scale-ups, so that they can bring their ideas and intellectual property assets to market,” and added: “Too many promising companies are leaving Europe not because of a lack of talent or strong ideas but because our financial system does not fully recognise the value of intangible assets when it comes to securing the funding they need to grow.”

Similarly, Nathalie Berger, Director for Competitiveness Coordination at the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, highlighted Europe’s strong research foundations but weak commercial conversion, stating: “Europe has world-class universities, leading researchers and a strong scientific base, yet it remains too slow in turning innovation into market success.” She added: “As a result, many high-potential innovative companies in Europe with valuable intellectual property are leaving in search of better growth opportunities,” and continued: “The policy momentum is now building initiatives such as the competitiveness compass, the post-Draghi agenda and the future European competitiveness fund require mechanisms to unlock capital for technology-based companies,” She further noted: “Europe must ensure that its financial system better recognises the latent potential of intellectual property assets and that

intellectual property-based financing can play a decisive role in this effort.”

The report situates these concerns within wider macroeconomic trends, pointing to weak productivity growth across the EU and a growing divergence from the United States. It notes that the gap in gross domestic product per capita between the EU and the US expanded from 17 per cent in 2002 to 30 per cent in 2023. It also references findings from the 2024 Draghi report on European competitiveness, which indicated that nearly 30 per cent of EU-founded unicorn companies between 2008 and 2021 eventually relocated abroad.

EUIPO estimates suggest that intellectual property-backed financing represents a substantial untapped opportunity, potentially unlocking between 30 billion and 120 billion euros annually. Over a ten-year horizon, this could equate to between 150 billion and 580 billion euros in additional financing, with an estimated cumulative contribution to EU GDP ranging from 70 billion to 750 billion euros. This would correspond to an overall GDP increase of approximately 0.4 per cent to 4.2 per cent, underscoring the scale of the potential economic uplift.

The report argues that closing the intellectual property financing gap will require coordinated reforms across multiple areas, including improving transparency, enhancing valuation methodologies, and strengthening coordination between financial institutions, businesses, and policymakers. It also recommends greater use of intellectual property value in lending decisions and the development of a stronger empirical foundation to support market expansion.

Among the proposed reforms are measures to improve access to bank lending, strengthen valuation standards for intellectual property assets, and broaden financing channels beyond traditional banking structures, including venture capital and public funding mechanisms. Companies, the report suggests, should also build stronger intellectual property portfolios and improve internal management and business planning capabilities before seeking financing based on intangible assets.

A further priority identified is the development of more robust valuation frameworks that would allow financial institutions to assess intellectual property assets with greater consistency and confidence. The report calls for a more integrated and scalable ecosystem capable of supporting the full lifecycle of intellectual property financing, from creation to monetisation.

These recommendations align with the European Union’s savings and investments union initiative, which seeks to deepen capital markets and direct more long-term private investment toward innovation-driven enterprises. The report concludes that without stronger mechanisms for disclosure, valuation, and risk-sharing, Europe risks failing to unlock the full economic potential of its knowledge-based economy and may continue to underfund its most innovative companies.

By fLEXI tEAM