The gap between industry needs and engineering graduates’ competences is being tackled by project-based courses, which also help to develop key innovation competences to address current societal challenges. Nevertheless, there is limited understanding about what innovation competences are developed through the different types of project-based courses. This study discusses innovation competences development in these courses with the aim of understanding how to better design educational strategies to improve them. Through content analysis, we compare the outcomes of two groups of Telecom Engineering students undergoing a capstone course following a classical product development project approach and a challenge-based course using Design Thinking. Results show that both course types contribute to developing innovation competences. Nevertheless, depending on the chosen pedagogy some competences are developed further. The traditional project-based course demonstrates better results in Planning and Managing Projects. Creativity, Leadership, and Entrepreneurship are more developed through a challenge-based approach combined with Design Thinking.