The issue of Europe's ability to survive the storm is looming heavily amid geopolitical tensions and unstable markets, especially as President Trump appears to be intended to have his pound tariffs from the continent.
However, the large new report argues that it will become an important pillar of Europe's security, defense and future autonomy, particularly from the United States.
DeepTech raised 15 billion euros ($16.3 billion) in venture investments in 2024, according to a 184-page report from venture companies Reikestar, Walden Catalyst, Dealroom and DeepTech Conference. The report also found that almost a third of all venture capital invested in Europe are currently falling into deep technology.
M&A activity in the space increased to $12.2 billion last year, the report said, but it turns out that European deep tech startups still rely on the US for their exits. Furthermore, 50% of the growth capital raised by DeepTech startups comes from outside the continent.
Still, DeepTech could also be viewed as a hedge against the usual “momentum investment” among venture capitalists, the report said.
Lukas Leitner, co-author of the report, Lakestar's Deeptech Investor, told TechCrunch that geopolitical tensions pose a critical challenge, but Europe needs to embrace the moment, and that Deeptech could be key to unlocking the continent's future resilience.
However, the future path is not without challenges. The US has a deep tech and has a “flywheel effect,” but the European ecosystem is still immature, Reitner notes. “There's a flywheel in the “shallow” technical scene. Many second-time founders have come out of Revolut and others to build great companies. But it's not yet from Deeptech companies. ”
“Europe has strong research institutions, engineering talent and supportive public sentiment towards DeepTech, but policy changes are needed to develop a culture that supports taking risks,” he added.
Arnaud de La Tour, CEO of Hello Tomorrow, said the notion that Europe was computing with AI has been recently challenged by the arrival of open source Deepseek. “It's a great opportunity for Europe. […] Due to the geopolitical landscape, many are about to return to Europe. But we definitely need to have the right policy framework to unlock the kinds we may have. ”
Leitner pointed out that Europe's relative weakness in computing power is offset by the strengths of photonic computing, bringing great benefits to speed and efficiency. “We're really good in Europe using photonics, because we have a great laser system and we have great basic research on the photonic side,” he said.
De La Tour added that Europe can also use American brain drainage as science is being reimbursed by the Trump administration. “The National Science Foundation, the biggest advocate for research applied to US founders, cut its budget in half. Many of those great scientists have no work anymore, and many have been able to come to Europe,” he said.