The European Union Intellectual Property Office (EUIPO) has published a major report examining the use of intellectual property as a source of financing for innovative businesses across Europe.
The report, titled intellectual property-backed financing in Europe, highlights the underutilisation of intellectual property rights in securing funding and outlines measures to strengthen a more effective financing market within the European Union.
It finds that while Europe remains strong in innovation, research and entrepreneurial talent, it continues to lag behind global competitors in commercialising ideas at scale.
The analysis identifies intellectual property rights such as trademarks, patents and designs as central to the value of innovative companies, yet still largely untapped as financial assets.
According to the report, intangible assets now make up the majority of corporate value, but companies often face difficulties using their intellectual property portfolios to access financing.
These challenges are linked to fragmented capital markets, limitations within the single market and structural barriers that restrict the use of intellectual property as collateral.
The findings show that sectors intensive in intellectual property generate around 48 per cent of EU gross domestic product and approximately 31 per cent of employment.
Despite this, only 13 per cent of companies holding intellectual property rights have attempted to secure financing using these assets, while most have never carried out a professional valuation.
This reflects both limited awareness among businesses on how to leverage intellectual property and a lack of expertise among investors and banks in assessing such assets.
The report warns that these constraints are contributing to a widening gap between Europe and other major economies in terms of innovation financing and competitiveness.
It also highlights that financial and market limitations are pushing many innovative companies to relocate their headquarters outside the European Union in search of better growth opportunities.
“Trademarks and other intellectual property rights are not an end in themselves they connect ideas to markets, helping businesses bring innovation to those markets,” said João Negrão, Executive Director of the EUIPO.
“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,” he 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,” he continued.
“Europe has world-class universities, leading researchers and a strong scientific base, yet it remains too slow in turning innovation into market success,” said Nathalie Berger, Director for Competitiveness Coordination at the European Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs.
“As a result, many high-potential innovative companies in Europe with valuable intellectual property are leaving in search of better growth opportunities,” she added.
“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 continued.
“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,” she said.
The report places these findings within the context of broader economic trends, noting that Europe has experienced weak productivity growth and a widening gap with the United States.
It highlights that the difference in gross domestic product per capita between the EU and the US increased from 17 per cent in 2002 to 30 per cent in 2023.
According to the 2024 Draghi report on European competitiveness, nearly 30 per cent of unicorn companies founded in the EU between 2008 and 2021 relocated abroad.
The EUIPO estimates that intellectual property-backed financing could mobilise between 30 billion and 120 billion euros annually, representing a significant untapped opportunity.
Over a ten-year period, this could translate into additional financing of between 150 billion and 580 billion euros, with a cumulative impact on EU gross domestic product ranging between 70 billion and 750 billion euros.
This would correspond to an increase of between 0.4 per cent and 4.2 per cent of EU GDP, underlining the scale of the potential economic benefit.
The report emphasises that addressing the intellectual property financing gap requires coordinated action across several priority areas, including improving visibility, strengthening valuation methods and enhancing coordination among stakeholders.
It also calls for leveraging intellectual property value in lending decisions and building a stronger evidence base to support the development of the market.
Among the proposed measures are efforts to improve access to bank financing, strengthen intellectual property valuation practices and expand funding options beyond traditional bank lending, including public support and venture capital.
The report recommends that companies develop stronger intellectual property portfolios and enhance their capabilities in intellectual property management and business planning before seeking financing.
It also stresses that more robust valuation frameworks are needed to allow financial institutions to assess intellectual property with greater accuracy and confidence.
A more coherent and scalable ecosystem is required to ensure that the full financing lifecycle of intellectual property is effectively supported.
The findings are aligned with the EU’s savings and investments union initiative, which aims to strengthen the financial system and channel more long-term private capital towards businesses and innovation across Europe.
The report further stated that without adequate mechanisms for disclosure, valuation and risk sharing, Europe risks failing to fully unlock this opportunity and direct sufficient capital towards knowledge-based companies.