Why deeptech can be Europe’s competitiveness flywheel
According to several experts, the EU has an edge in deeptech and a key to the bloc’s future competitiveness.
Published on April 16, 2025
-min.jpg&w=3840&q=75){kind=small}
© European Innovation Council
Mauro swapped Sardinia for Eindhoven and has been an IO+ editor for 3 years. As a GREEN+ expert, he covers the energy transition with data-driven stories.
Applying fundamental research and engineering breakthroughs to products is how deeptech can be shortly defined. Carbon capture technologies, photonics, and battery tech are examples of deeptech applications. Thanks to a strong and spread-out network of research institutions, Europe has a steady output of high-quality research. The Old Contintent is home to 9 of the 25 top research institutes worldwide. Transforming more of these breakthroughs into successful companies is Europe’s litmus test.
Since its official establishment in 2021, the European Innovation Council (EIC) has stepped in to play a pivotal role in financing EU deeptech. The agency was created to scale up breakthrough tech and operates on multiple levels. So far, the agency has funded 150 European startups, investing €6 billion, and promises to commit more.
During the recent EIC Summit, multiple experts emphasized the need to continue following this path. Nevertheless, much must happen to ensure this willingness becomes a reality. It is not merely about technological dominance–although it strongly is–but moreover about Europe’s relevance and economic competitiveness.
Deeptech is Europe’s edge
Mayor of Lisbon, and former commissioner of science, Carlos Moedas believes the EU has an edge. “Europe is well positioned in deeptech because it is better in science. Americans are very good at digital technology, and after the first phase of the internet, where we were at the top as we built the backbone for it, they surpassed us. But we are entering a new phase, where deeptech will matter more,” he told reporters during the EIC Summit.
Bindi Karia, innovation expert and EIC ambassador, praises Europe for its wealth of talent and innovators. “It is about finding where we are strong and investing in it. But it is a long game, and it will take a long time for deeptech to enter the market. Therefore, the government programs are crucial to providing initial support,” she adds.
Fostering startup growth
As part of the Competitiveness Compass–the economic doctrine for its five years of tenure–the Commission also announced it would launch a startup and scaleup strategy. This plan would provide actions to remove barriers to startup growth. The Commission launched a public consultation with entrepreneurs, which closed in mid-March, to listen to their needs. The official text will come on May 28.
“We want this strategy to be business-driven and bottom-up driven, to tackle their challenges. Depending on the stage they are at, they face challenges in accessing the market, finance, talent, and infrastructure, as well as regulatory barriers. I can assure you that many of the proposals we have received will be part of the final strategy,” said Commissioner Zaharieva, answering IO+ at a press point during the EIC Summit.
Part of this strategy involves establishing a 28th regime. This would be a separate legal entity with a uniform set of business, labor, and taxation rules to facilitate more straightforward operation on a European level.
Mobilizing pension funds’ money
The main hurdle remains the ever-present funding gap European startups face when it is time for them to scale up. To this extent, pension fund contributions have often been deemed key to injecting more money into European startups.
“On one side, teaching pension funds to assess risk profiles, conduct due diligence, and carry out investments in the venture space is crucial. Many of them simply don’t have the resources to do so,” says Kinga Stanislawska, member of the EIC board and co-founder of European Women in VC. “At the same time, we need entrepreneurs in the financial institutions space to create funds of funds, that would give pension funds more investment opportunities,” she continues.
When asked about greater involvement of pension funds in venture financing, Commissioner Zaharieva was optimistic. “We simply won’t have any big European venture capital (VC) firms without the help of pension funds, nor unicorns. The Commission is working with them to overcome some regulatory barriers, such as the limits they have to invest in VC. At the same time, we have to create incentives as a public institution. An example would be first risk cover to motivate them to step in with public funding first.”
Commissioner Zaharieva awarding some of the winners of the European Prize for Women Innovators - © European Innovation Council
Cities as deeptech talent scouts
But how about nurturing companies and helping them excel? In Moedas’ view, it has to be done first locally. As mayor of the Portuguese capital, he launched the unicorn factory, an initiative to reinforce the city’s position as a prime European tech hub.
“In three years, 14 unicorns set up offices in Lisbon, bringing 70 companies to the city, creating 16,000 job opportunities. That’s the story I tell the mayors. Innovation is not sexy, politically speaking, yet it needs to be central in a mayor’s program. A mayor wants to create more jobs, yet mayors don’t; companies do,” he told reporters. In his vision, other European cities should replicate the model and set up a proper innovation pipeline, with the best companies directly connected to the EIC.
Growing deeptech fostering diversity
Europe can be more successful if more diversity is fostered. According to European Women in VC, the largest network of female tech investors, investments yield up to six times more returns when done by a mixed management team.
“We are a team of entrepreneurs, investors, and consultants,” says Kasia Piasecki, managing director of European Women in VC. “So we know how important it is to show the numbers. And what our research shows is that female-led VCs also target underfunded markets, such as healthcare, where big opportunities lie.”
.png&w=828&q=75)