VCs weigh in on Europe’s Future in the Critical Deep Tech Market

VCs weigh in on Europe’s Future in the Critical Deep Tech Market

Today, writing about Europe is difficult. As we speak, Russia is invading Ukraine, and global markets are in freefall. This is the political and military landscape of the continent. This column looked at the European technology market’s deep tech skills last week. In other words, Europe’s economic future.

We could have put off compiling this follow-up essay for a day or two. However, because so many of the comments below are optimistic about Europe’s future, it seemed appropriate to keep on. A report from Angular Ventures kicked off the Exchange’s investigation at European deep tech. Its findings reveal a picture of record-breaking financial infusion into African startups working on complex, difficult-to-commercialize foundational technologies.

Today, we’re talking to Michael Jackson of the Cottonwood Technology Fund, Isabel Fox of Outsized Ventures, Nick Kingsbury and Andrea Traversone of Amadeus Capital Partners, and Cyril Bertrand of XAnge about their reactions to the data. We’ll review the relevant facts before delving into different viewpoints on where European deep tech investment is headed. The consensus is that investment will drop in 2022 after reaching record highs in 2021, that things are now calm, and that this year might see an increase in European deep tech investment and startup activity.

In the interest of being fair to our sources, it’s worth noting that they began crafting their responses well before today. But, with the threat of war approaching, questions about what it would mean for private markets, which are not immune to stock market drops, cyberattacks, and other calamities, were already being discussed. On the other hand, certain deep tech initiatives will undoubtedly reduce world – and thereby European – reliance on oil, gas, and other related fuels. To put it another way, there’s politics inside technology; it’s even simpler to argue that technical progress has an influence on politics.

In an email to TechCrunch, Traversone addressed this, writing that “the current geopolitical situation is fueling” a lot more interest in “healthcare and cybersecurity deep tech” and so-called “sovereign tech,” with a focus on “strategic areas such as semiconductors, telecom equipment, and power technologies” at times. Last week, we started with Angular’s report, which had one major caveat: it was focused on both enterprise and deep tech investments. In some ways, the coupling of the two organizations makes sense, since it demonstrates how Europe’s venture capital sector is shifting away from consumer technology. However, we need to be clear about what deep tech is and isn’t for our objectives.

Deep tech, according to Jackson, “may signify a lot of things… and since it’s become such a nebulous term, it means less and less.” We concur. While we don’t want to confine our focus too much, especially if new disciplines develop, we do want to be clear that we’re talking about “the ‘deep’ end of the deep tech pool – robots, semiconductors, energy transfer, medical devices, hardware, all that fun stuff!” as Jackson defines it.

What does the future hold for deep tech in Europe? Following a record-breaking venture capital market in 2021, minor dollar or transaction volume decreases in 2022 would scarcely be considered a retreat. At the same time, several venture capitalists believe that the European deep tech market will continue to grow. Please keep in mind that those predicting a slowdown are hardly pessimists; when it comes to deep tech investment on the continent in 2019 and 2020, they are almost certainly expecting favorable results.