The #Deeptech Market: Bold, Bumpy & Brimming with Potential
The allure of deeptech is undeniable. Forget app fads—deeptech is about solving problems that matter: quantum computing, AI, advanced materials, and synthetic biology. But here’s the catch: deeptech isn’t headline fuel; it’s a capital-heavy, endurance-based play for those with a high pain tolerance and a longer time horizon.
🧬 1. Deeptech Isn’t for Instant Gratification
In SaaS, a lousy week means tweaking code. Deeptech? Try years of R&D, regulatory hurdles, and breakthroughs. In 2023, European deeptech pulled in €18B VC funding, with public backing as essential non-dilutive fuel. Deeptech founders in Europe don’t just compete—they survive. Government support turns deeptech from risky to a long-term play on EU’s economic independence.
💸 2. Europe’s Bet on Deeptech: Bold or Just Necessary?
With the US and China monopolizing the big stages in AI and quantum, Europe is placing its chips on climate tech and advanced materials. That’s not bravery; it’s existential. In 2024, Europe poured €10.3 billion into AI and machine learning, a 24% uptick from last year.
But exits? A rollercoaster. Total exits hit €26.2 billion in Q3, but they were propped up by mega-IPOs like Puig in Southern Europe. Europe’s deeptech scene is a blend of conviction and necessity, a fact that’s not lost on investors.
🚀 3. Deep Pockets, Patient Gains
Deeptech investors aren’t your typical adrenaline junkies; we are marathoners. And patience is paying off—deeptech-focused funds are pulling in an average net IRR of 16%, well above traditional tech’s 10%. The takeaway? Cash out early, and you’re probably leaving money on the table. Sequoia’s “evergreen fund” model could become the standard for deeptech. Deeptech isn’t for the impatient; it’s for those who understand that real value compounds over time.
📊 4. The Valuation Puzzle
Deal values for AI and ML in Europe are holding steady, but the honeymoon phase is cooling off for some sectors. Semiconductor valuations are finally re-aligning after 2023’s overblown peaks. Meanwhile, frontier labs like Anthropic and Cohere are still pushing sky-high revenue multiples, some over 30x ARR. Europe’s climate and healthtech markets remain in the spotlight, but the days of sky-high rounds may be on the decline.
#️⃣ 5. The Grind - Europe's deeptech market shows resilience amidst shifting investment dynamics.
- AI & Machine Learning: AI investments surge, €10.3B YTD, indicating strong investor confidence.
- Cleantech: Cleantech funding declines, €6.2B YTD, reflecting investor caution.
- Exits: European exits rise to €26.2B, driven by large IPOs.
- Venture Growth Stage: Venture growth funding stable, €7.6B, mature sectors outperforming early-stage.
TL;DR: Deeptech isn’t for the faint-hearted or the short-sighted. But for those who can stomach the risk, the upside isn’t just financial—it’s transformational. #Europe is building a new industrial age, one breakthrough at a time.