Deep Tech is not just another buzzword. It is the technology that will shape the world for decades to come.

Europe is sitting on a gold mine of Deep Tech potential. It has the brains, the ideas, the patents, and some of the top institutions in the world.

On paper, Europe has everything it needs to shape the future of Deep Tech:

• Strong and well-educated founders
• A thriving ecosystem of dedicated corporations
• Focused government initiatives
• Smart investors ready to help it grow

From AI-driven cybersecurity solutions to hyper-personalized medicine, Deep Tech could unlock €8 trillion in value by 2030 and redefine industries.

But, Europe is not owning the future - others are.

Despite the region’s leadership in research - with seven of the top ten spots in the Global Innovation Index and nine of the world’s top 20 research institutions - they continue to fall short in commercialization and investment.

Over the past five years, European Deep Tech firms secured just €58 billion in funding, compared to €215 billion in the U.S. In fact, less than 10 per cent of DeepTech unicorns are based in Europe.

Europe’s long-term competitiveness is at stake here. That’s why in this article, with the help from Linn Kretzschmar, CERN Venture Connect Programme Lead at CERN, Ann-Lauriene Schumacher, Entrepreneurship Manager at ETH AI Center, and Manuel Hösle, Coach & Investment Manager at Fraunhofer Venture, we will explain why the region is falling behind in Deep Tech commercialization and, more importantly, what should be done about it. 

The challenges and gaps in Deep Tech commercialization

1. Europe’s high cost of failure and investor risk aversion

Past entrepreneurial failures cause investors to pass on funding new innovations, often making  entrepreneurs even more risk-averse.

In Europe, the entrepreneurial ecosystem is often overshadowed by a deep-seated fear of failure, combined with policies that punish failed founders. This cultural mindset stifles innovation and discourages risk-taking.

In fact, it has been argued that strict labor laws and high restructuring costs make bold bets irrational. Which pushes entrepreneurs and investors to play it safe, favoring incremental progress over game-changing breakthroughs.

Surveys show a significant portion of the European population perceives failure in a negative light, a sentiment reflected in the region’s stringent bankruptcy laws.

Take Germany, for example, where bankrupt entrepreneurs face a six-year period of personal liability, effectively preventing them from starting afresh. While in France, the legal waiting period is slightly shorter at three years, the lingering social and professional stigma of failure continues to hinder efforts to rebuild.

Contrast this with the United States, where mechanisms such as Chapter 11 bankruptcy create a more forgiving environment, allowing founders to restructure and pivot. This approach has paved the way for high-profile success stories, such as Elon Musk, who turned early setbacks into groundbreaking achievements. 

The US and China are out there building AI leaders like OpenAI and scaling unicorns that will shape the future. Meanwhile in Europe, we’re still arguing over risk, debating regulations and making sure everything is just right before getting to work.

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But it’s not just risk-averse entrepreneurs slowing Europe’s advances in innovation, it’s our institutional investors.

A 2022 survey revealed 62% of European investors are reluctant to back entrepreneurs with prior failures, compared to just 23% in the US.

Deep Tech innovation requires patient capital with long investment horizons and huge initial investments.

However, Europe’s investment landscape is characterized by a cautious, risk-averse approach, with institutional investors often prioritizing low-risk, steady returns over high-risk, high-reward opportunities.

Their conservative mindset is at odds with the long development cycles inherent in pioneering technologies.

Compounding the challenges in Europe is its fragmentation. The numerous individual countries, government models, currencies, and regulations spread across the region, make it challenging for startups in Europe to scale across the continent - something U.S.-based startups don’t have to contend with.

In the US, venture capital giants such as Tiger Global, Andreessen Horowitz and global investment banks like Goldman Sachs actively invest in Deep Tech. The point being that overall, in the US they are investing more often than the EU.

While European investors tend to focus on late-stage, proven models - primarily in software or fintech. “Truly disruptive and niche innovations often require a new perspective on the market and its demands,” Manuel Hösle, Coach & Investment Manager at Fraunhofer Venture has observed. “That’s something established companies and corporations often overlook.”

As a result, many European Deep Tech start-ups rely heavily on government grants, such as those from EIC and Horizon Europe, rather than private capital.

Even when it comes to government grants,  the European Investment Fund (EIF) remains fragmented and significantly smaller than U.S. counterparts such as DARPA or SBIR, limiting the scale of available funding.

The figures highlight the extent of the problem: in 2023, US Deep Tech start-ups raised $22 billion in Series B+ funding, while their European counterparts secured just $7 billion.

This stark contrast underscores the urgent need for a structural shift in investment strategies to foster a more competitive Deep Tech ecosystem. 

2. Lack of entrepreneurial role models

If Europe wants to convince its entrepreneurs of the future to take risks and accept the potential for failure, it needs to show them it’s possible and encouraged - not just in the U.S.A., but also in Europe.

Europe is home to world-class scientific talent, yet it struggles to translate this strength into entrepreneurial success stories on par with global figures such as Elon Musk or Jeff Bezos.

While the continent produces exceptional researchers, many opt to remain within academia rather than enter the startup ecosystem, creating a noticeable gap in entrepreneurial role models, particularly in high-impact fields like deep tech.

The challenge of researchers entering entrepreneurial enterprises is noted at leading universities, with Ann-Lauriene Schumacher, Entrepreneurship Manager at ETH AI Center stating, “I’m a scientist myself. I have the scientist mindset and I know that it is completely different from the entrepreneurship mindset. It means going away from perfection - to speed and speaking directly to customers.”

The numbers tell a powerful story: in 2022, only 15% of European PhD graduates considered launching a start-up, compared to 45% in the US. This disparity highlights a structural and cultural divide which inhibits innovation.

This is a phenomenon evident at leading research laboratories such as CERN, where Linn Kretzchmar, CERN’s Venture Connect Programme Lead has commented, “Getting people at CERN to be interested in entrepreneurship and to get them more into this entrepreneurship culture - it’s like getting them to swim in a different water than they’re used to.

“To make this work, we need to engrain this on a cultural level and create educational programs to show graduates opportunities they may not have thought of before.”

Consider Yann LeCun - a pioneer in artificial intelligence, trained in France, who moved to the U.S.A. to lead AI research at Meta. His journey exemplifies Europe’s ongoing brain drain challenge.

Further exacerbating the issue is the fact that Europe’s most high-profile tech founders, such as Daniel Ek of Spotify and Taavet Hinrikus of Wise, have primarily succeeded in software and SaaS rather than Deep Tech or hardware.

Meanwhile, the US has produced a more balanced mix of software leaders, such as Mark Zuckerberg, alongside Deep Tech visionaries like Elon Musk, Sam Altman, and Jensen Huang. The imbalance leaves Europe with fewer visible role models in sectors that help drive innovation.

3. Fragmentation and slow bureaucracy

Instead of focusing on innovation, founders are burdened with excessive paperwork and regulatory hurdles.

Europe’s Deep Tech ecosystem is hampered by a fragmented landscape and sluggish bureaucratic processes. With over 50 national and EU-level support programs, each with its own distinct application criteria and requirements, start-ups must navigate a maze of complexity that delays funding, slows commercialization, and stifles innovation.

Take the European Innovation Council (EIC), for example. While it awarded €1.7 billion to start-ups in 2023, many recipients had to wait 12–18 months to access these funds - a crippling timeframe for early-stage ventures.

In contrast, the US operates with greater speed and efficiency through programs such as SBIR and DARPA, enabling start-ups to secure funding and scale without unnecessary delays. Likewise, China’s centralized funding model has proven highly effective in accelerating the growth of Deep Tech firms.

Corporate and industry collaboration needs improvement

Strong collaboration between corporations (both private and public) and start-ups drives innovation and eases commercialization, yet Europe is still struggling to make it happen.

Collaboration between corporates and start-ups is critical for driving innovation, yet European firms remain hesitant to engage with high-risk technologies. Unlike their US counterparts, which actively acquire and invest in Deep Tech start-ups, many European corporates prioritize cost cutting over bold R&D investments.

Risk aversion limits their ability to capitalize on breakthrough innovations and weakens Europe’s competitive edge.

Advocating for the need for better corporate and industry collaboration, CERN Venture Connect Programme Lead, Linn Kretzschmar has stated, “We have a lot of technologies that can power Deep Tech ventures, and we just need to work together a bit better to be able to transfer the technologies that we have in fundamental research organizations, like CERN, and bring them to market. It really is a joint effort to do that.”

The numbers speak for themselves. Only 12% of European corporations engage in start-up acquisitions or venture building, compared to 40% in the US.

And unlike in the US, where corporates actively build, acquire, and invest in Deep Tech ventures as a core part of their growth strategy, many European companies remain risk-averse.

Instead of proactively securing strategic control over emerging technologies, they often limit engagement to R&D partnerships, venture clienting, or small minority investments—none of which provide the necessary influence to drive transformative growth.

Meanwhile, the majority of transformative acquisitions continue to take place in the US, further reinforcing the innovation gap.

Moving deep tech commercialization forward

Europe’s Deep Tech ecosystem stands at a crossroads. While the region boasts strong talent and funding in certain areas, it lags behind global competitors like the U.S. and China in terms of risk-taking, corporate engagement, and the cultural acceptance of failure.

For Europe to realize its full potential in Deep Tech, it must address the regulatory, bureaucratic, and cultural bottlenecks holding the sector back.

The Fix: What is the path forward for Europe’s Deep Tech future?

Deep Tech commercialization in Europe faces many challenges. But there’s a path forward.

“The question isn’t whether Europe has the talent for Deep Tech commercialization, because we definitely do,” says ETH AI Center’s Entrepreneurship Manager, Ann-Laurience Schumacher. “The real challenge is creating the right ecosystem that enables this talent to thrive.”

There are several policy and funding changes that must be made to make Europe a leader in Deep Tech commercialization - but it’s not just that. Europe must embrace smaller but critical cultural shifts to accelerate its Deep Tech ecosystem.

These adjustments will shape the long-term mindset of founders, investors, and institutions, helping to break down barriers that hinder innovation and growth.

1. Normalizing failure & risk-taking

In Europe, failure is often seen as a setback rather than a stepping stone. Changing investor attitudes to see failure as experience rather than something to be penalized, is crucial.

Government-backed seed funds should prioritize second-time founders who have learned from their previous ventures. Media narratives must shift to celebrate entrepreneurs who have failed, pivoted, and eventually succeeded, inspiring the next generation of innovators.

• What can Europe start doing in 2025?
  
  
  • Exempt the top 10% of earners from labor protection laws. These high-skilled professionals typically don't need safeguards; freeing up this segment could unlock more risk-taking, investment, and competitiveness across Europe.
  • Venture capital firms and accelerator programs could establish funds specifically for second-time founders.
  • Government innovation agencies should launch campaigns promoting a tolerance for failure, highlighting successful pivots and relaunches.

• • Organizations and research institutes should adopt a portfolio approach and accept that some initiatives will fail.
    
    

2. Entrepreneurial education from an early age

Embedding entrepreneurship into university STEM programmes is essential for nurturing the next wave of Deep Tech entrepreneurs.

Universities should incorporate venture-building into PhD and engineering courses, making business skills a core part of the curriculum.

Additionally, mentorship programmes should connect students with experienced entrepreneurs who have successfully built start-ups.

• What can Europe start doing in 2025?
  
  
  • Universities could establish PhD-to-startup incubators, pairing researchers with business minds to bridge the gap between academia and commercialization.
  • Commercialization-focused courses for STEM PhDs should become mandatory, inspired by MIT’s approach.

• • Universities should expand their ecosystems and forge partnerships with organizations that specialize in entrepreneurship and venture building.
    
    

3. Encouraging scientists to become entrepreneurs

European research grants currently prioritize academic publications over commercialization. To overcome this, Europe must adjust grant structures to better support the commercialization of research.

Additionally, career safety nets—such as fellowships—should allow researchers to pause their academic careers for start-ups and return later. Tenure incentives should reward scientists for turning research into tangible products, not just publishing papers.

This is something already being done at a small scale in Europe. “We are trying to connect researchers with experienced entrepreneurs, mentors and investors, who can help them navigate the funding journey,” says Manuel Hösle, Coach & Investment Manager at Fraunhofer Venture. “While also connecting them with other researchers who have already built successful companies.”

• What can Europe start doing in 2025?
  
  
  • EU research programmes like Horizon Europe could introduce grants aimed at funding researcher spinouts.
  • Universities could offer entrepreneurial sabbaticals, allowing faculty to launch start-ups without jeopardising their academic positions.
    
    

4. Shift in how Deep Tech start-ups approach growth

European Deep Tech start-ups often rely too heavily on slow-moving EU grants rather than seeking early-stage venture capital.

But the biggest problem is the so-called "valley of death" where access to large capital investment is simply unavailable, leaving many projects abandoned.

To thrive, these start-ups must raise capital earlier and adopt a global mindset. Universities must streamline their spinout processes to enable quicker market entry for innovations born in research labs.

• What can we start doing in 2025?
  
  
  • Universities should create fast-track commercialization programmes, similar to Stanford’s StartX.
  • EU-backed Deep Tech Fast Funds could be introduced to directly invest in university spinouts rather than just offering grants.
    
  • Research organizations should engage more proactively with business-building experts and look at commercial strategies and strategies more holistically to offer better support.
    
    

5. Make Deep Tech more accessible to young talent

Deep Tech should not feel exclusive. Many young engineers and researchers don’t view it as a viable career path due to the perceived complexity and high barriers to entry.

Europe can make a tangible difference by lowering the cost of starting Deep Tech companies, such as by providing access to labs, prototyping, and industrial tech.

Hands-on competitions and hackathons - especially in AI, biotech, quantum, and space tech - can provide young innovators with the opportunity to experiment and gain practical experience.

• What can we start doing in 2025?
  
  
  • Universities and tech hubs should offer free access to labs and AI computing power for early-stage founders.
  • Deep Tech start-up hackathons with real funding prizes should be launched to encourage students to experiment.
    
    

2025: The year of decisive action, not analysis

The time for discussion is over.

Europe must shift from analysis to action. Small cultural shifts and specific policy changes, compounded over time, will lay the foundation for a resilient Deep Tech ecosystem that can thrive by 2030:

• Normalizing failure to encourage entrepreneurial risk-taking
• Embedding entrepreneurship into STEM education to foster start-up culture
• Reforming investment models to attract private capital into high-risk sectors
• Streamlining bureaucratic processes to accelerate funding access
• Strengthening corporate collaboration to drive industry-wide innovation

But this is just the start. European corporates must rethink their Deep Tech commercialization strategies and move away from cost efficiency and incremental innovation. This approach is destined to fail in global markets.

The way forward is clear:

• Move from passive investing to active ownership – prioritize majority growth equity investments and internal venture building over scattered minority stakes and low-hanging options like venture clienting.

• Integrate Deep Tech into corporate growth strategies – establish dedicated investment arms that proactively scale high-potential technologies rather than waiting for external funding rounds.

• Leverage venture-building expertise – partner with specialists to systematically launch and scale Deep Tech ventures in a controlled, strategic manner.

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