#32026H0720Commission Recommendation (EU) 2026/720 on the Definition of Innovative Enterprises, Innovative Startups and Innovative Scaleups

The European Commission has issued a non-binding Recommendation establishing common definitions for three categories of innovation-driven companies: innovative enterprises, innovative startups, and innovative scaleups. The goal is to harmonize how Member States and EU institutions identify these entities when granting access to public support schemes, funding programs, tax incentives, and regulatory sandboxes. The Recommendation introduces specific criteria — such as R&D expenditure thresholds, age of the company, growth metrics, and IP activity — to distinguish between the three categories. Innovative startups are generally young companies (typically under 10 years old) with high innovation potential but not yet scaled, while innovative scaleups are further along the growth curve with demonstrated revenue or employment growth rates. By aligning definitions across the EU, the Recommendation aims to reduce fragmentation in national support ecosystems and make it easier for qualifying companies to access cross-border programs such as the European Innovation Council (EIC), Horizon Europe, and InvestEU. It also seeks to prevent misuse of preferential treatment by companies that do not genuinely qualify as innovative. Although non-binding, Member States are encouraged to adopt these definitions in national legislation and administrative practice by a target date, and the Commission will monitor uptake and report on progress. The Recommendation forms part of the EU's broader Start-up and Scale-up Initiative and the Innovation Union agenda.

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