Why Innovative EU Start-ups and Scale-ups Relocate: Impacts on Innovation and IP

A recently published study by the European Investment Bank (EIB), carried out in collaboration with the European Commission under the InvestEU Advisory Hub, examines why innovative start-ups and scale-ups relocate part of their activities outside the EU. The study draws on in-depth interviews with founders and executives and focuses on companies operating in digital and deep technologies, biotechnology and clean technologies. 

Across sectors and geographies, founders and executives pointed to a consistent set of drivers behind relocation decisions: access to capital, proximity to large and unified markets, regulatory simplicity, and the availability of experienced commercial and sales talent. Importantly, relocation is rarely an all-or-nothing decision. The United States is perceived as offering a more attractive environment on these dimensions, while the EU is described as fragmented, bureaucratic and risk averse, particularly when it comes to supporting firms beyond early growth stages.  

All interviewed companies opted for partial relocation, typically establishing a holding company abroad and building commercial presence outside the EU while keeping key functions such as R&D and engineering teams in Europe. 

Founders also describe what, in their view, could help prevent relocation. Their recommendations include: modernising and unifying regulations so new technologies can be tested and launched without compliance bottlenecks; unlocking more funding and reducing early-stage costs (especially for deeptech, biotech and cleantech); improving labour and immigration policies to enable flexibility and cross-border hiring; and strengthening education, mentorship and founder support systems for global scaling. 

What this means for IP and corporate structuring 

The study highlights that relocation can go hand in hand with changes to a company’s legal structure. In some cases, founders set up a new parent company in the United States— often legally incorporated in Delaware, a common choice for venture-backed firms—and reorganise the group so that the original EU company becomes a subsidiary. This restructuring may include transferring shares and, in some cases, placing certain assets (including IP rights) under the new parent company. 

The report also notes that moving valuable assets—especially intellectual property—can raise tax complexities, including exit taxation in several EU countries (most notably Germany, France and the Netherlands). 

The findings are relevant to ongoing EU policy discussions on improving conditions for startups and scaleups — including work under the EU Startup and Scaleup Strategy.