Could deeptech serve as Europe’s path to autonomy from the US?

Amidst geopolitical tensions and unstable markets, the query of Europe’s skill to climate the storms forward, particularly as President Trump appears intent on having his pound of tariffs from the continent, is looming giant.

However an intensive new report claims deeptech is poised to turn into a key pillar of Europe’s safety, protection, and future autonomy, particularly from the U.S. 

Deeptech attracted €15 billion ($16.3 billion) in enterprise investments in 2024, in keeping with a 184-page report by enterprise companies Lakestar, Walden Catalyst, Dealroom and the deeptech convention, Hey Tomorrow. The report additionally discovered that just about one-third of all enterprise capital invested in Europe is now going to deep tech.

M&A exercise within the house elevated to $12.2 billion final yr, the report mentioned, nevertheless it additionally discovered that European deeptech startups nonetheless depend on the U.S. for exits. Moreover, 50% of the expansion capital raised by deeptech startups comes from outdoors the continent.

Nonetheless, deeptech may be seen as a hedge towards regular “momentum investing” amongst enterprise capitalists, mentioned the report. 

The report’s co-author Lukas Leitner, additionally a deeptech investor at Lakestar, advised TechCrunch that whereas geopolitical tensions pose important challenges, Europe must embrace the second, and deeptech might be the important thing that unlocks future resilience for the continent.

Nevertheless, the highway forward will not be with out challenges. The U.S. has a “flywheel impact” in deeptech whereas Europe’s ecosystem continues to be immature, Leitner famous. “We have now a flywheel within the ‘shallow’ tech scene. You see numerous second-time founders, popping out of Revolut and so forth, constructing nice firms. However not but from deeptech firms.”

“Europe has sturdy analysis establishments, engineering expertise, and supportive public sentiment for deeptech, however there have to be coverage modifications to foster a tradition that helps taking dangers,” he added. 

Arnaud de la Tour, the CEO of Hey Tomorrow, mentioned that the notion that compute-poor Europe would at all times lag in AI was just lately challenged by the looks of open-source DeepSeek: “It’s an enormous alternative for Europe, as a result of we’ve nice AI expertise […] Many want to come again to Europe due to the geopolitical panorama. However we undoubtedly have to have the precise coverage framework so as to unlock the type of potential that we’ve.”

Leitner identified that Europe’s relative weak point in computing energy is offset by its strengths in photonics computing, which presents main benefits in velocity and effectivity. “We’re actually good in Europe with photonics, as a result of we’ve good laser techniques, and we’ve good elementary analysis on the photonic facet,” he mentioned.

De la Tour added that Europe might additionally benefit from a brain-drain within the U.S. as science is defunded by the Trump administration. “The Nationwide Science Basis, which is the largest supporter of founder-applied analysis within the U.S. has had its finances reduce by half. Loads of these nice scientists don’t have a job anymore, and lots of might come to Europe,” he mentioned.