The ‘Innovation’ pillar of Horizon Europe will be strengthened, with the EIC’s budget being more than tripled in the proposal, while the EIT label is missing.
Europe is redefining its vision for research and innovation for the next Framework Programme as of 2028 (hereinafter ‘FP10’ or ‘Horizon Europe’). In the European Commission’s (EC) Proposal for the Regulation establishing Horizon Europe, the pillar related to innovation activities simply evolves from ‘Innovative Europe’, as used in the current Framework Programme (FP9), into ‘Innovation’. While the change of name is not a revolution, the allocated amount undoubtedly confirms the pivotal role of innovation in the EC priority planning: €38.7 billion over the next seven-year programming period, compared to the existing €13.6 billion. The winner of this substantial rise is the European Innovation Council (EIC), which is more than tripling its current share of €10.1 billion to a target of €34.4 billion. This is no surprise, given that all the evidence gathered over the previous months (Draghi, Heitor, Competitiveness Compass, Startup and Scaleup Strategy) made a compelling case for reinforcing the EIC.
The other ‘Innovation’ instrument proposed for FP10 is called ‘Innovation Ecosystems’. At first glance, looking at the Horizon Europe Regulation and the Specific Programme, this compartment seems to be the result of the consolidation of the European Innovation Ecosystems (EIE) and the European Institute of Innovation & Technology (EIT). This new blend echoes the mid-term evaluation of FP9, which acknowledges an overlap between the two instruments, as “both lay the groundwork for a pan-European innovation ecosystem connecting regional innovation ecosystems across the EU”. Since the EIT is one notable absentee from the Horizon Europe Proposal, there are many speculations and unanswered questions regarding its future; among them, whether the existing nine EIT Knowledge and Innovation Communities (KICs) could continue in a new format under FP10. This uncertainty arises at a delicate time, as a tenth KIC on ‘Water, Marine and Maritime sectors and ecosystems’ is set to be launched in 2026, but the new Proposal could potentially affect funding post-2027. Nonetheless, a few days before the publication of the Proposal, the EIT Governing Board proposed a revamped structure for EIT 2.0, highlighting the leadership’s willingness to adapt and be part of the EU innovation landscape.
Another unanswered question regarding ‘Innovation Ecosystems’ is the role and position of the Eureka Network, for which the Swiss Innovation Agency, Innosuisse, assumes the chairmanship as of 1 July 2025 and until Summer 2026. So far, the European Partnership on Innovative SMEs (InnovSMEs) has been co-funded under the EIE, with the participation of 37 Eureka member countries. The Specific Programme (Art.13(c)) explicitly mentions that Innovation Ecosystems should support “programmes to support innovative SMEs, startups and scaleups to expand and access international markets through market viability studies, place-based innovation tools, collaborative research and innovation, exchange of talents, tailored mentorship, access to global investor networks, regulatory guidance, locali[s]ed marketing support, and soft-landing services in target countries”. Therefore, this leaves room for interpretation whether InnovSMEs will fill this gap.
Looking back at the biggest portion of the ‘Innovation’ budget, the EIC will be the key engine for disruptive innovation for the period 2028-34. It will integrate more ARPA-like elements into its operations to support high-risk projects in “stages”, or discontinue them, if they do not deliver on disruptive solutions. ARPA-like means the EU takes inspiration from the American [Defence] Advanced Research Projects Agency ([D]ARPA) models, famously known for bringing frontier technologies to the market in both military and civilian domains. The ARPA model will already be tested as a pilot in the remainder of FP9 (with the anticipated EIC Advanced Innovation Challenges planned in 2026). The EIC Programme Managers will play a more active role, notably assessing, guiding, or recommending the discontinuation of projects. The pipeline from ERC and collaborative research to the EIC will also be strengthened to commercialise breakthrough research results and technologies faster.
DARPA is another route the EC aims to pursue in Horizon Europe. The proposal suggests introducing a dedicated defence and dual-use innovation track within the EIC, reflecting geopolitical realities and the stronger focus on security and defence across EU policies and programmes. It will do so in synergy with initiatives like the EU Defence Innovation Scheme (EUDIS) and CASSINI for space ventures. This new funding track will be established in close coordination with the European Competitiveness Fund (ECF), which will operate a dedicated policy window on ‘Resilience and Security, Defence Industry and Space’ reflected in the second pillar of FP10 and its ‘Competitiveness’ part. The implications for associated countries remain unclear, but Recital 21 of the Horizon Europe Regulation stipulates that “for EIC defence related activities, only entities established in third countries associated with the ECF for defence activities should be eligible for funding”. This evolution reflects Europe’s willingness to become a stronger player in the commercialisation of strategic technologies while reinforcing sovereignty in critical domains.
Beyond the new ARPA/DARPA novelties, the EIC retains its three cornerstone instruments: (i) Pathfinder, supporting early-stage, high-risk research with grants for proof-of-concept and prototyping; (ii) Transition, bridging the gap between research and market, including the creation of spin-offs and startups; and (iii) Accelerator, empowering SMEs and startups to scale with blended finance. Furthermore, the EIC Fund will be expanded to attract other public or private investors and to increase its leverage effect. However, the Scaleup Europe Fund that was announced in the EU Startup and Scaleup Strategy will continue under the agreed-upon terms in FP9 until 2027 and will then likely be transferred to the ECF, since “all scaleup financing under the Multiannual Financial Framework 2028-2034 should take place under the ECF”.
Although many proposals still require clarification, this renewed framework suggests that Europe should be bolder, faster, and more coordinated in its innovation strategy. By strengthening the EIC with flexible funding and active portfolio management, while investing in strong innovation ecosystems, the EC is set to establish its path toward technological leadership, sovereignty, and global competitiveness.