Deeptech is Europe’s trump card for growth, says Dealroom.co
A recent analysis by the startup intelligence company sees deeptech as a massive driver for European growth.
Published on March 20, 2025
Research at Cradle lab - © Cradle
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Deeptech will drive Europe’s next wave of innovation, according to the Dealroom.co recently released The 2025 European Deep Tech Report. The analysis–in collaboration with Lakestar, Walden Catalyst, and Hello Tomorrow–aims to standardize Europe's understanding of deeptech, analyze the features of its ecosystem, explore core areas, and outline strategies to boost Europe's global competitiveness.
Deeptech, which focuses on applying scientific and engineering breakthroughs to products for the first time, is at the forefront of innovation, addressing some of the world's most pressing challenges, from climate change to healthcare.
Clarifying misconceptions
In clarifying some of the misconceptions, the report underlines how it needs more capital and longer development timelines than conventional tech. However, once the technology matures, it often sees accelerated revenue growth. The analysis also shows how deeptech and conventional tech companies have similar failure rates.
Protein engineering company Cradle’s co-founder, Stef van Grieken, made the case for these companies on LinkedIn, commenting on the report insights. “Deeptech companies typically solve fundamental problems with real-world applications, are often built on defensible IP and years of specialized research, and are less susceptible to "me too" competition and market whims.”
Europe's potential as a global deeptech hub
Europe boasts a robust research ecosystem, with six of the top 20 universities and nine of the top 25 research institutes globally. Institutions like the University of Oxford, the ETH Zurich, and the EPFL are at the forefront of innovation.
These institutions also lead the charts for the value of companies they generated, as shown in the report university spinout value rank. Three Dutch institutions also made it to this list. The Delft University of Technology is the one that created the highest spinout value thanks to a higher number of venture capital (VC) backed startups and series A+ startups.
The Eindhoven University of Technology follows suit, also scoring points for the number of future unicorns. The Netherlands Organisation for Applied Scientific Research (TNO) also made it to the list.
© Dealroom.co
However, Europe lags in fostering an entrepreneurial culture necessary to translate this research into market-ready products. The report suggests focusing on select centers of excellence and cultivating a risk-taking environment to bridge this gap. Experts suggest that increased late-stage capital and fostering a robust ecosystem are vital to creating global leaders in these transformative fields.
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Funding landscape in Europe
In 2024, €15 billion was invested in European deeptech, a 28% decrease from 2021 but significantly outperforming the 60% decline in regular tech funding. The UK, France, and Germany are the leading countries in deeptech investment, with London, Paris, and Munich serving as the main hubs. However, half of the late-stage funding comes from non-European investors, indicating a need for more domestic growth capital.
The report highlights that while early-stage funding is available, securing growth capital remains a challenge. This is partly due to Europe's risk-averse investment culture and the need for more substantial involvement from institutional investors.
© Dealroom.co
Key deeptech sectors and trends
The report delves into several key sectors within deeptech:
- Novel AI: This sector saw significant growth, with investments in autonomous driving, foundational models, and large language models (LLMs). The focus is on enhancing AI's understanding of the physical world and developing specialized verticals like biotech and materials science.
- Future of Compute: Investments in quantum computing, AI inference, and photonics are driving advancements in data center efficiency and bandwidth. Companies like Quantinuum and Axelera AI are at the forefront of this sector.
- Novel Energy: There is growing interest in hydrogen, nuclear fission, and fusion technologies. Companies like Sunfire and Tokamak Energy are exploring new energy solutions despite regulatory and cost challenges.
- Space Tech: Emphasizing European sovereignty in space, investments in launch vehicles and earth observation technologies are on the rise. The report highlights the importance of space as a critical infrastructure for governments and the military.
- Robotics: Advances in humanoids, quadrupeds, and warehouse robotics are transforming industries. Companies like Anybotics and Dexory are leading the way in this sector.
European deeptech future
As European deeptech continues to evolve, it presents a unique opportunity to address continental challenges like climate change and energy security through innovation. The sector's strategic importance is underscored by its ability to produce spinouts and breakthroughs, securing Europe's position at the forefront of global technological advancement. By addressing the challenges and leveraging its strengths, Europe can establish itself as a global hub for deeptech, shaping the future of technology and society.
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