In January 2025, the European Patent Office (EPO) published two important studies: “Intellectual Property Rights and Firm Performance in the EU” and “Mapping Investors for European Innovators”. These reports provide comprehensive insights into the interplay between intellectual property rights (IPRs), firm performance and the investment landscape for European start-ups.
Intellectual Property Rights and Firm Performance in the EU[1]
This joint study by the EPO and the European Union Intellectual Property Office (EUIPO) analyses the performance of small and medium-sized enterprises (SMEs) and large firms in the European Union in terms of their ownership and use (which can also be declined in terms of strategic exploitation) of patents, trademarks and designs.
The study shows that larger firms tend to invest more capital in their IP portfolio, especially when developing more costly IPRs, namely patents. In particular, 49% of large firms own at least one type of IP right, as opposed to SMEs, which fall short just below 10%. These percentages plummet when taking solely into account patent and design ownership, as only 1% of SMEs own these kind of assets compared to large firms that stand north of 10%.
Moreover, it confirms a strong positive correlation between a firm’s ownership of different types of IPR and its economic performance. Data shows that IPR-owning firms generate, on average, higher revenues per employee, create more jobs and pay higher wages than their counterparts without an IP portfolio. Patent ownership shows the strongest link to firm performance, with about 29% higher revenue per employee and 43% higher wages per employee compared to non-IPR owning firms (data referred to period 2019-2022).
While these findings may seem unsurprising to many, they underscore the critical role of IPRs in enhancing firm performance, particularly for SMEs aiming to scale and compete in the global market against more structured entities. Notably, in fact, IPR-owning SMEs show a significant increase in revenue per employee (+ 44%) than their counterparts, scaling up to 51% higher revenues when their IP portfolio combines patents, trademarks and designs.
Mapping Investors for European Innovators[2]
The second study, published on 16 January 2025 by the EPO, focuses on identifying investors who are crucial for the successful commercialisation of cutting-edge innovations. It sheds light on investment patterns, funding gaps, and the role of both public and private investors in supporting innovation across the EU.
Start-ups often face financial challenges during the innovation process. A shortage of investments in key technologies and innovation markets poses a significant obstacle to the development of European companies, especially when facing other non-EU competitors. External investors, both private and public, are therefore essential for a start-up’s success and play a crucial role in a company’s ability to innovate and invent.
The study aims at helping inventive start-ups find investors by introducing the Technology Investor Score (TIS), a novel metric which represents the proportion of companies that have filed patent applications in an investor’s portfolio. Investors with a higher TIS score are in principle better equipped to support innovative companies.
For example, when comparing the TIS scores of private European investor networks with their US counterparts, it becomes apparent that EU start-ups face a significant lack of late-stage private funding[3] (which is particularly important for patent-oriented companies, as this is the time when they need substantial investments in order to prepare inventions for market entry). On the contrary, European start-ups heavily rely on public investors – such as Horizon Europe and other national investing initiatives –, especially in relation to basic research, which is mostly financed by universities and government agencies.
To address these challenges, the EPO has updated the Deep Tech Finder[4] (a freely accessible digital tool) to help companies identify the most suitable investors based on criteria such as growth stage, country and technical field. This initiative aims to make it easier for innovative European start-ups to access the funding they need to grow and compete globally.
[1] Full study is available here: https://link.epo.org/web/publications/studies/en-ipr-performance-study.pdf
[2] Full study is available here: https://www.epo.org/en/news-events/news/bridging-gap-mapping-investors-strengthen-europes-innovation-ecosystem
[3] Of the top 100 private investors in Europe, 62% focus on early-stage funding, while only 22% specialise in later-stage funding. In contrast, in the US, 98 of the top 100 investors are private, with more than half focusing on late-stage funding, reflecting stronger private support for scaling high-tech companies.
[4] See https://datavisualisation.apps.epo.org/datav/public/dashboard-frontend/host_epoorg.html#/explore?dataSet=1