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

Amid geopolitical tensions and volatile markets, the question of Europe’s ability to weather the storms ahead, especially as President Trump seems intent on having his pound of tariffs from the continent, is looming large.

But an extensive new report claims deep tech is poised to become a key pillar of Europe’s security, defense, and future autonomy, in particular from the U.S. 

Deep tech attracted €15 billion ($16.3 billion) in venture investments in 2024, according to a 184-page report by venture firms Lakestar, Walden Catalyst, Dealroom, and the deep tech conference Hello Tomorrow. The report also found that nearly one-third of all venture capital invested in Europe is now going to deep tech.

M&A activity in the space increased to $12.2 billion last year, the report said, but it also found that European deep tech startups still rely on the U.S. for exits. Furthermore, 50% of the growth capital raised by deep tech startups comes from outside the continent.

Still, deep tech could also be seen as a hedge against normal “momentum investing” among venture capitalists, said the report. 

The report’s co-author, Lukas Leitner, also a deep tech investor at Lakestar, told TechCrunch that while geopolitical tensions pose significant challenges, Europe needs to embrace the moment, and deep tech could be the key that unlocks future resilience for the continent.

Image Credits:Lakestar, Walden Catalyst, Dealroom, Hello Tomorrow

However, the road ahead is not without challenges. The U.S. has a “flywheel effect” in deep tech while Europe’s ecosystem is still immature, Leitner noted. “We have a flywheel in the ‘shallow’ tech scene. You see a lot of second-time founders, coming out of Revolut and so on, building great companies. But not yet from deep tech companies.”

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“Europe has strong research institutions, engineering talent, and supportive public sentiment for deep tech, but there need to be policy changes to foster a culture that supports taking risks,” he added. 

Arnaud de la Tour, the CEO of Hello Tomorrow, said that the notion that compute-poor Europe would always lag in AI was recently challenged by the appearance of open source DeepSeek: “It’s a huge opportunity for Europe, because we have great AI talent … Many are looking to come back to Europe because of the geopolitical landscape. But we definitely need to have the right policy framework in order to unlock the kind of potential that we have.”

Leitner pointed out that Europe’s relative weakness in computing power is offset by its strengths in photonics computing, which offers major advantages in speed and efficiency. “We’re really good in Europe with photonics, because we have good laser systems, and we have good fundamental research on the photonic side,” he said.

De la Tour added that Europe could also take advantage of a brain drain in the U.S. as science is defunded by the Trump administration. “The National Science Foundation, which is the biggest supporter of founder-applied research in the U.S. has had its budget cut by half. A lot of those great scientists don’t have a job anymore, and many could come to Europe,” he said.

Mike Butcher (M.B.E.), formerly Editor-at-large of TechCrunch, has written for UK national newspapers and magazines and been named one of the most influential people in European technology by Wired UK. He has spoken at the World Economic Forum, Web Summit, and DLD. He has interviewed Tony Blair, Dmitry Medvedev, Kevin Spacey, Lily Cole, Pavel Durov, Jimmy Wales, and many other tech leaders and celebrities. Mike is a regular broadcaster, appearing on BBC News, Sky News, CNBC, Channel 4, Al Jazeera and Bloomberg. He has also advised UK Prime Ministers and the Mayor of London on tech startup policy, as well as being a judge on The Apprentice UK. GQ magazine named him one of the 100 Most Connected Men in the UK. He is the co-founder of TheEuropas.com (Top 100 listing of European startups); and the non-profits Techfugees.com, TechVets.co, and Startup Coalition. He was awarded an MBE in the Queen’s Birthday Honours list in 2016 for services to the UK technology industry and journalism.

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