🤖 #6: Vivian's Deeptech Insider: Europe's Deep Tech Boom: A Closer Look

Jobs at DeepL, LabGenius, Springbank, Creandum

Author

Vivian Chan, PhD
September 12, 2024

Hello and welcome to #6 edition of the monthly Vivian’s Deeptech Insider.

In this issue, we’re diving deep into insights specifically for investors. If you've been following our newsletters, you know we alternate between founder and investor perspectives. Last time, we explored the 5 Roles to Master as a Startup Founder, so now it’s time to focus on investor insights. We also track jobs to monitor market momentum, this time outlining opportunities at DeepL, LabGenius, Springbank, and Creandum (scroll down for details).

Deep Dive (Investor Series):

Europe's Deep Tech Boom: A Closer Look 🚀

Europe is experiencing a remarkable surge in Deeptech innovation, with cities like London, Paris, Berlin and Stockholm at the forefront. These cities are developing into thriving Deeptech hubs, with Stockholm alone securing $3.2 billion in mega-rounds in 2023 (according to Dealroom). However, beneath the surface of these thriving hubs, a set of hidden forces and challenges are driving the growth of this vibrant sector.

Hidden Forces Driving Innovation

One of the primary forces fuelling Deeptech innovation in Europe is the strength of its educational and research institutions. Universities like ETH Zurich, Oxford, and Cambridge are not only producing cutting-edge research but are also leading the continent in high-value spinouts. The UK, in particular, stands out, generating twice the spinout value of Germany, showcasing its ability to turn academic breakthroughs into commercial ventures. This deep connection between academia and industry is a powerful engine for innovation.

Additionally, public support and funding are at an all-time high. Initiatives like the €1 billion NATO fund, SPRIND, and the European Tech Champions Initiative are providing essential late-stage capital, with the latter aiming to mobilise €10 billion in investments. This influx of funding is critical for scaling startups that typically require 48% more capital and take 35% longer to reach significant revenue milestones than traditional startups.

However, many patents remain inactive, especially within the UK, representing an untapped reservoir of technological potential that, if activated, could unlock even more innovation across Europe.

Which Deeptech sectors thrived in Europe?

Europe is well on its way to becoming a global leader in AI and sustainable technologies. In 2023, novel AI funding reached a record $1.3 billion, a 50% increase from the previous year, showing Europe’s commitment to AI across industries like healthcare and cybersecurity. Sustainability-focused innovations are also gaining traction, with investments addressing climate change in energy, agriculture, and materials science.

While growth in these sectors is promising, certain areas, such as novel energy and computational Biology & Chemistry, have seen significant drops in funding - by 50% compared to 2022. This indicates that while Europe is poised to lead in AI and sustainability, challenges remain in ensuring consistent growth across all Deeptech sectors.

Challenges Lurking Beneath the Surface

Despite Europe’s progress, scaling Deeptech companies and technological independence are still hurdles. Currently, Deeptech funding at the early (pre-)seed stage is largely domestic. However, by late-stage funding, nearly 50% of capital comes from US and Asian investors, despite the additional public support. This reliance on external funding could pose risks to Europe’s technological sovereignty, particularly in critical areas like AI and sustainability.

While startups in this space reach their first $1 million in revenue in about the same time as traditional companies, they require more capital and experience greater dilution for founders and investors. Europe also needs to harmonise university spinout terms to accelerate the commercialisation of research and to build denser talent clusters to foster collaboration and innovation.

In addition, Europe needs to broaden its pool of institutional investors and limited partners (LPs) to ensure startups have sufficient access to capital for later-stage development. Governments and large corporations also play a critical role as key customers, driving demand for Deep Tech innovations. Countries like Israel, Sweden, the US, Singapore, the UK, and Switzerland are already leading the way, investing a greater share of their wealth in Deeptech compared to others.

This surge in innovation not only underscores Europe’s position as a powerhouse in global Deeptech but also presents transformative opportunities for entrepreneurs, investors, and policymakers to shape the future of technology on a global scale. Europe’s role in this space is more critical than ever, and its potential as a leader in global Deeptech is just beginning to unfold.

Now, onto the jobs - Vivian

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