We consider a model of innovation where firms are allowed to invest in several projects. It is shown that free-entry, in the absence of start-up costs, leads to an equilibrium with one project per firm. The presence of start-up costs reintroduces the rationale for parallel projects undertaken by each firm. In this case free-entry implies that all adjustment to changes in the gains to innovation occur through the number of firms in the market, with projects per firm remaining constant.