The topic of the final work is defining concepts of innovation and entrepreneurship, as well as examining the relationship between the mentioned. Entrepreneurship represents the ability to be based on creativity and limited production factors, forming a certain efficient economic activity. At the center of entrepreneurship there is an entrepreneur, an individual who operates at his own risk and has the resources necessary for a particular economic activity, and makes decisions related to it on his own. One of the key qualities of a successful entrepreneur is his creativity, ie innovation, to produce a new product, create a new way of production, discover new resources, etc. Innovation is the ability to do something in a new way. In business it is a spontaneous or systematic process of achieving improvements that lead to beneficial positive changes and the increase in the value of work. Innovation is the key to the success of many world -renowned companies that dominate the market, but it can also be a chance for the advancement of small and medium-sized businesses and the way to compete. The Republic of Croatia has be en evaluated by the GII and the EU on the innovativeness of its entrepreneurs, and the results are not the best, leaving room for further progress and development. The rating index also confirms the analysis of the Central Bureau of Statistics for the period 2014-2016. conducted research on a sample of 4500 companies in the Republic of Croatia and only 43.4% of innovative companies. Some of the main obstacles to the introduction of innovation activities are the lack of own resources or the cost of spending. The Republic of Croatia also lags behind the number of patents, and in Europe is at the very bottom, while the most recognized patents are from the field of chemistry. The future of the Republic of Croatia in terms of innovation can be much more positive because there are plenty of innovative entrepreneurs who have imposed their ideas on the market with their ideas and have gained worldwide recognition such as Include and Cro Teama. Various EU funds such as Obzor 2020, ESIF and EFSU can be used as a tool t o help innovation progress on the territory of the Republic of Croatia.