No. 83 - Private Equity and Innovation in the Euro Area

Markets, Infrastructures, Payment Systems
by Emanuele Degani, Simone Letta and Tommaso Perez
July 2026
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This study examines the relationship between private equity (PE) investments and the innovation capacity of euro area firms, with a special focus on green technologies. Using data on PE deals, patent applications and firm-level characteristics across eight euro area countries from 2010 to 2019, we investigate the link between PE investment and innovation, the latter measured by patent filings. Our findings indicate that firms receiving PE investments increase their patenting activity, with the effect being more pronounced for venture capital (VC) investments. Such a relationship may also stem from the ability of more innovative firms to attract a larger share of PE funding. In this case, PE investors may act as catalysts by amplifying existing innovation potential. With respect to green innovations, the empirical evidence does not indicate a link between innovation and PE investments, possibly due to structural barriers, such as the high risk and the long development cycles, which may have limited PE's ability to drive green technological progress during the sample period.

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  1. 08 July 2026
    No. 83 - Private Equity and Innovation in the Euro Area
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