Europe’s deep tech1 sector is currently witnessing a significant surge in both innovation and interest, heralding a wave of potential scientific and technological breakthroughs. These developments are building credibility for a vision of Europe playing a leading role on the global innovation stage. Central to this vision is the ongoing debate about European competitiveness, highlighted by the Draghi report,2 which emphasizes the need for Europe to enhance its innovation ecosystem and address investment gaps.
With Europe’s solid research foundation in place for these technological advances, the tangible impact is already evident in the realm of investment. From 2019–23, Europe’s share of the global investment in deep tech leaped from 10 percent to 19 percent.3 This upward trajectory is even more pronounced within Europe itself. As of 2023, deep tech accounts for approximately 44 percent of all tech investments in Europe, an increase of 18 percentage points since 2019.
This surge in technology investment has produced strong returns, particularly for deep tech. Since 2003, deep tech investments have consistently outperformed traditional tech sectors, delivering a superior net annual average internal rate of return (IRR) of 16 percent after all fees and costs, compared to just 10 percent for traditional technology investments.4
There are compelling reasons to be optimistic about Europe’s potential to become a powerhouse in the deep tech arena. Although it largely missed out on the growth in consumer technology that reshaped Silicon Valley, Europe nonetheless can build on its strong foundation of research and technological advancement and its formidable industrial heritage.
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