Introduction Of Deeptech
Table of Contents
In an era of geopolitical tensions and volatile markets, Europe faces mounting uncertainty about its economic and technological future. With President Trump poised to impose new tariffs on European industries, the continent must look for innovative ways to ensure its autonomy. A recent report suggests that deeptech—a sector encompassing cutting-edge fields such as AI, quantum computing, and advanced materials—could be the key to securing Europe’s long-term resilience and independence, particularly from the U.S.
The Rise of Deeptech Investment in Europe
Investment in Europe is surging. In 2024 alone, venture capitalists poured €15 billion ($16.3 billion) into the sector, according to a 184-page report by venture firms Lakestar, Walden Catalyst, Dealroom, and the deep tech conference Hello Tomorrow. The report reveals that nearly one-third of all venture capital invested in Europe now flows into deep tech startups, reflecting the sector’s growing importance.
Mergers and acquisitions (M&A) in European It also rose to $12.2 billion last year. However, the report highlights a persistent challenge: European It firms still rely heavily on the U.S. for exits. Additionally, 50% of the growth capital raised by It startups originates from outside the continent, underscoring Europe’s continued financial dependence on foreign investors.
Hedge Against Market Volatility
Beyond its strategic importance, It is also seen as a hedge against traditional venture capital practices, which often favor momentum investing. Unlike consumer-tech startups that thrive on network effects, deeptech companies require long-term commitment, extensive R&D, and significant capital to develop groundbreaking innovations.
Lukas Leitner, a It investor at Lakestar and co-author of the report, emphasized that geopolitical uncertainties present an opportunity for Europe to double down on its strengths in deeptech. “We need to embrace the moment. It could be the key that unlocks future resilience for the continent,” he stated.
Challenges in Building a Self-Sustaining Ecosystem
While Europe has a well-established research ecosystem, featuring world-class institutions and engineering talent, it still lags behind the U.S. in translating scientific advancements into successful companies. Leitner pointed out that Europe’s tech ecosystem has a “flywheel effect” in traditional software and fintech startups, with second-time founders launching new ventures. However, this dynamic has yet to fully materialize in deeptech.
Another challenge is Europe’s relative weakness in computing power, particularly in AI infrastructure. However, experts argue that Europe can leverage its strengths in photonics computing, which offers significant advantages in speed and efficiency. “We’re really good in Europe with photonics because we have strong laser systems and a deep foundation in fundamental research,” Leitner explained.
The Role of Policy in Fostering Growth
Despite its advantages, Europe must implement policy changes to fully capitalize on deeptech. Supportive regulations, increased risk capital, and incentives for technology transfer from academia to industry are crucial.
Arnaud de la Tour, CEO of Hello Tomorrow, noted that Europe’s AI potential has been underestimated, citing the emergence of open-source DeepSeek as an example. “It’s a huge opportunity for Europe because we have great AI talent. Many researchers are considering returning to Europe due to geopolitical instability elsewhere, but we need the right policy framework to unlock this potential,” he said.
Furthermore, de la Tour highlighted a potential brain drain in the U.S. due to budget cuts in scientific research. “The National Science Foundation, the largest supporter of applied research in the U.S., has had its budget cut by half. Many talented scientists could look to Europe for new opportunities,” he suggested.
A Path Forward
For Europe to achieve true autonomy in deeptech, it must build an ecosystem that not only fosters groundbreaking research but also ensures that startups have the capital, infrastructure, and policy support necessary to scale globally. Deeptech offers Europe a chance to break free from over-reliance on the U.S., but only if the right conditions are met.
By embracing deeptech, Europe has the opportunity to become a global leader in next-generation technologies, securing economic resilience and technological sovereignty for years to come.
