The third annual report on European deeptech prepared by Dealroom, Lakestar, and Walden Catalyst, shows that amid the difficulties faced by global startups, deeptech startups are taking the lead.
With approximately $15 billion year-to-date in 2023 (nearly on the same level as a year before), and in contrast to the decline within the fintech sector of around 70 percent, deeptech currently stands out as one of the most resilient categories in venture capital.
Even on the regional level, the EU-27 deeptech market showed the highest resilience compared to other regions with 6 percent growth in the last 12 months (while in the other regions, there is a recorded decline in investments).
Regional deeptech hubs
The data from the report shows that between 2018 and 2023 there has been a significant increase in the establishment of deeptech hubs around Europe. London attracted $12.8 billion, Stockholm secured $10.3 billion, Paris accumulated $7.7 billion, Munich obtained $4.9 billion, and Oxford & Cambridge jointly garnered $9 billion.
Just in 2023, the top three countries that received the most Deeptech funding across Europe were:
The UK ($3.4 billion)
France ($3. billion)
Sweden ($3.2 billion)
“Now is the time for Europe to cultivate its technology epicentres, where pioneers converge, collide, and catalyse the future of technology borne from Europe.” — Steven Jacobs, Partner and CPO at Lakestar
Educational sector fosters success stories
The deeptech sector in Europe is supported by a strong educational sector making Europe exceptionally well-placed to leverage upcoming technologies.
Home to six of the top 20 global universities for computer science, a highly educated talent pool (approximately 1.5 times more STEM graduates compared to the US), and substantial government and public support including initiatives such as the $1 billion NATO fund, SPRIND, and JEDI, the continent stands at an advantageous position.
“Over the last decade Europe has been emerging as a major international startup ecosystem. But right now the deck is being reshuffled on global entrepreneurship, due to the rise of deep tech and AI. It has been a watershed year for innovation. Europe has the tools to lead in the next wave of innovation, but there is no time to lose.” — Yoram Wijngaarde, Founder & CEO of Dealroom
AI and the future of compute
The report defines “Novel AI as fundamentally new maths and algorithms that are being used in products and companies for the first time”. It goes on to highlight that investment into Novel AI startups in Europe has reached $1.3 billion in 2023, representing a growth of over 50 percent compared to a year before.
Investment into startups working on the future of compute is up 10 percent in 2023 compared to 2022, again, bucking a significant counter-trend in global venture capital. The significant rounds that contributed to this factor include the €100 million Series B funding round for quantum computing startup Pasqal and the $120m Series D funding round for AR/VR startup Aledia.
“With AI models getting bigger, Moore’s Law coming to an end, and pressing societal considerations, a paradigm shift is needed in the way computing infrastructure is designed, built and operated.
"This is what the future of compute is all about: inventing the architectures and technologies of tomorrow that will continue to drive innovation and bring a new era of prosperity to the masses.” — Nicolas Autret, Partner at Walden Catalyst
The report can be downloaded here.
Lead image: benzoix