Europe is reshaping Deep Tech funding

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The new technological race is no longer solely about innovation. Against a backdrop of artificial intelligence, industrial competition between major blocs and growing geopolitical fragmentation, the central issue is determining who will control the technologies that will define the coming decade. Europe has realised that having talent, scientific excellence or promising start-ups is no longer enough. The ability to develop, fund and scale strategic technologies has become a decisive factor in preserving its competitiveness and autonomy in the new global landscape.

For years, the continent has lived with a structural contradiction. Europe is home to some of the world’s most advanced technical universities and research centres, leads scientific advances in fields such as health, energy and advanced engineering, and produces technology companies with high growth potential. However, many of these companies continued to rely on foreign capital to finance their expansion phases, particularly when they reached stages where the required investment increased significantly. As a result, part of the value generated by European innovation ended up being developed under financial and strategic dynamics external to the continent.

This situation is particularly relevant at a time when technology is no longer seen solely as an economic driver but has become a critical infrastructure. Artificial intelligence systems, semiconductors, quantum technologies, biotechnology and space capabilities now have implications that go beyond the business sphere and directly affect countries’ industrial competitiveness, economic security and strategic resilience. This is why Europe is progressively rethinking its funding architecture to strengthen those technological capabilities considered essential for its future.

In this process, Deep Tech has come to occupy a central position. It not only represents the scientific frontier of the coming decade, but also encompasses a significant proportion of the technologies that will determine Europe’s ability to compete in strategic sectors. The conversation, therefore, no longer revolves solely around start-ups or funding rounds, but rather on how to build our own technological capabilities capable of sustaining the continent’s economic growth and industrial autonomy.

Europe begins to fund technological capacity

This shift in focus is no longer confined to rhetoric. In recent years, it has begun to take shape in the form of new financial instruments, specialised funds and industrial policies designed to support the development of strategic technologies from the early stages of research through to industrialisation.

One of the most notable examples is the European Innovation Council Fund (EIC Fund), the European Commission’s investment arm. Since its creation in 2020, the fund has reached a capacity of over €4 billion and has supported hundreds of technology companies across Europe. Beyond the volume of direct investment, its importance lies in its ability to attract additional private funding and address one of the main historical weaknesses of the European ecosystem: the lack of capital to support complex technologies through long development cycles.

The significance of this development goes beyond the figures. For much of the past few decades, the European Union has primarily played the role of technology regulator, establishing standards and regulatory frameworks that subsequently influenced other international markets. Without abandoning that role, Brussels is now also beginning to take on a more active role as a strategic investor, driving a gradual transformation of the European Deep Tech ecosystem and fostering the creation of its own industrial capabilities around technologies considered critical.

The rise of patient capital

The evolution of the funding model is largely a response to the specific characteristics of Deep Tech itself. Unlike other technology sectors, these companies typically require lengthy periods of research and development, complex infrastructure, and scientific or industrial validation processes that can take years to complete before achieving significant commercial scalability. Consequently, traditional venture capital dynamics are not always suitable for supporting this type of project.

Whilst a software company can grow relatively quickly and at low marginal costs, the development of a quantum system, a new energy technology or an advanced biotechnology platform requires higher levels of investment, longer time horizons and a greater tolerance for technological uncertainty. For this reason, so-called ‘patient capital’ is becoming increasingly important: funding capable of sustaining projects of high scientific complexity over long periods without demanding immediate returns.

Europe is beginning to adapt its investment mechanisms to this reality through hybrid models that bring together strategic public capital, pan-European funds, corporate venture capital, vehicles specialising in technology transfer, and institutional co-investment schemes. The aim is to cover the various stages of the innovation cycle and bridge the funding gaps that have historically hindered the growth of knowledge-intensive technology companies.

The data suggests that this transformation is beginning to take hold. According to Tech.eu, European technology investment reached €72 billion in 2025 through more than 3,700 deals, against an international backdrop marked by a slowdown in investment activity. Beyond the aggregate volume, it is particularly noteworthy to observe how a growing proportion of capital is being directed towards industrial-based technologies, including advanced hardware, applied artificial intelligence, space, energy, defence and quantum computing. All of this reflects a gradual shift from models focused primarily on software towards others more closely linked to the development of strategic technological capabilities.

The technologies in which Europe aims to take the lead

This new financial focus is closely linked to the priorities set out in European industrial policy. Artificial intelligence occupies a central position, particularly in areas where Europe has distinctive strengths relating to industry, healthcare, scientific research or highly regulated sectors. Although competing directly with major US players in certain segments may prove challenging, there is ample scope to lead in specialised applications linked to critical sectors of the economy.

At the same time, semiconductors and quantum computing have become priority areas due to their cross-cutting impact on the digital economy as a whole. External dependence on advanced components and certain manufacturing capabilities is now seen as a strategic vulnerability, which explains initiatives such as the European Chips Act and the growing institutional support for technologies considered critical to the continent’s future competitiveness.

Space is another sector undergoing rapid transformation. The growth of the European New Space ecosystem, the development of micro-launchers and the emergence of new companies specialising in orbital infrastructure reflect a technological ambition far greater than that which existed just a few years ago. At the same time, sectors such as biotechnology, precision medicine and the convergence of artificial intelligence and healthcare are creating new opportunities to translate Europe’s scientific strength into industrial leadership.

Added to these areas are energy, cybersecurity and dual-use technologies, where the boundary between innovation, economic competitiveness and strategic resilience is becoming increasingly blurred. Taken together, they form the core of a technology policy that seeks to strengthen Europe’s capacity to develop critical technologies within its own borders.

Spain aims to gain a foothold in the new Deep Tech landscape

Spain is also seeking to position itself within this transformation. In recent years, both public institutions and the various players in the innovation ecosystem have stepped up their efforts to strengthen technology transfer, foster science-based start-ups and attract investment into technology-intensive sectors.

In this context, the CDTI announced that by 2025 it would mobilise close to €1.942 billion through grants, loans, venture capital and instruments to support business R&D. A significant portion of these resources will be channelled through Innvierte, whilst specific initiatives focused on Deep Tech and technology transfer aim to strengthen the link between scientific research, entrepreneurship and the market.

The strategy is part of a broader ambition: to increase Spain’s influence within European innovation networks and to bridge the gap that has traditionally separated it from some of the continent’s leading technology hubs. This objective is beginning to be reflected in the consolidation of increasingly specialised ecosystems in cities such as Madrid, Barcelona, Málaga and Bilbao, where significant capabilities are being developed in artificial intelligence, digital health, space technologies and advanced industrial solutions. The current European investment cycle could significantly accelerate this positioning over the coming years.

Europe’s technological future is being decided now

Deep Tech has ceased to be a specialised niche and has become one of the pillars upon which Europe is redefining part of its industrial policy. The ability to develop strategic technologies will largely determine the continent’s economic, energy, scientific and industrial autonomy over the coming decades, which demands much closer coordination between institutions, private capital, corporations, universities, research centres and entrepreneurs.

Deep Tech has evolved from a specialised niche to become one of the pillars upon which Europe is redefining part of its industrial policy. The ability to develop strategic technologies will largely determine the continent’s economic, energy, scientific and industrial autonomy over the coming decades, which calls for much closer coordination between institutions, private capital, corporations, universities, research centres and entrepreneurs.

In this context, innovation can no longer be measured solely by the number of start-ups created or by valuations achieved in private markets. It must also be assessed by the ability to transform scientific knowledge into technological infrastructure, competitive industries and sustainable strategic advantages. From this perspective, the European challenge lies not merely in inventing the next disruptive technologies, but in ensuring that it has the necessary financial, industrial and political mechanisms to scale them up and turn them into real capabilities. To a large extent, the future of European Deep Tech will depend on this.