Amidst geopolitical tensions and unstable markets, the query of Europe’s capability to climate the storms forward, particularly as President Trump appears intent on having his pound of tariffs from the continent, is looming massive.
However an intensive new report claims deeptech is poised to turn out to be a key pillar of Europe’s safety, protection, and future autonomy, specifically from the U.S.
Deeptech attracted €15 billion ($16.3 billion) in enterprise investments in 2024, in keeping with a 184-page report by enterprise corporations Lakestar, Walden Catalyst, Dealroom and the deeptech convention, Hey Tomorrow. The report additionally discovered that just about one-third of all enterprise capital invested in Europe is now going to deep tech.
M&A exercise within the house elevated to $12.2 billion final 12 months, the report mentioned, but it surely additionally discovered that European deeptech startups nonetheless depend on the U.S. for exits. Moreover, 50% of the expansion capital raised by deeptech startups comes from exterior the continent.
Nonetheless, deeptech is also seen as a hedge in opposition to regular “momentum investing” amongst enterprise capitalists, mentioned the report.
The report’s co-author Lukas Leitner, additionally a deeptech investor at Lakestar, advised TechCrunch that whereas geopolitical tensions pose important challenges, Europe must embrace the second, and deeptech could possibly be the important thing that unlocks future resilience for the continent.
Nevertheless, the street forward isn’t with out challenges. The U.S. has a “flywheel effect” in deeptech whereas Europe’s ecosystem remains to be immature, Leitner famous. “We have a flywheel in the ‘shallow’ tech scene. You see a lot of second-time founders, coming out of Revolut and so on, building great companies. But not yet from deeptech companies.”
“Europe has strong research institutions, engineering talent, and supportive public sentiment for deeptech, but there need to be policy changes to foster a culture that supports taking risks,” he added.
Arnaud de la Tour, the CEO of Hey Tomorrow, mentioned that the notion that compute-poor Europe would at all times lag in AI was lately challenged by the looks of open-source DeepSeek: “It’s a huge opportunity for Europe, because we have great AI talent […] Many are looking to come back to Europe because of the geopolitical landscape. But we definitely need to have the right policy framework in order to unlock the kind of potential that we have.”
Leitner identified that Europe’s relative weak spot in computing energy is offset by its strengths in photonics computing, which gives main benefits in velocity and effectivity. “We’re really good in Europe with photonics, because we have good laser systems, and we have good fundamental research on the photonic side,” he mentioned.
De la Tour added that Europe might additionally reap the benefits of a brain-drain within the U.S. as science is defunded by the Trump administration. “The National Science Foundation, which is the biggest supporter of founder-applied research in the U.S. has had its budget cut by half. A lot of those great scientists don’t have a job anymore, and many could come to Europe,” he mentioned.
