A new report from Dealroom, Walden Catalyst, and Lakestar highlights Europe’s strengths alongside the need to address a multi-billion-dollar funding gap.
The 2026 European Deeptech Report, published by Lakestar, Walden Catalyst, and Dealroom, highlights a record surge in Europe’s deeptech ecosystem. VC-backed deeptech companies are now valued at $690 billion, with investment in the sector continuing to outperform the broader technology market.
Deeptech is playing an increasingly important role in addressing global challenges, including climate, energy, defence, and productivity. Europe is entering a pivotal phase, supported by strong research capabilities and rising demand for sovereign technologies. The region hosts 30 per cent of the world’s leading deeptech universities and produces twice as many science and engineering graduates as the US, creating a substantial technical talent base.
At the same time, geopolitical developments are driving investment into strategic areas such as AI infrastructure, semiconductors, space, and defence, positioning deeptech as a key contributor to economic growth and technological independence.
Yoram Wijngaarde, founder and CEO of Dealroom, noted that deeptech is increasingly important for Europe’s competitiveness, sovereignty, and long-term growth.
European deeptech now captures nearly a third of all venture capital, which would have been hard to imagine a decade ago. And yet, even with meaningful growth, investment still lags other markets, and there is a clear shortage of domestic capital willing to back deep tech ventures to scale.
Europe has the talent and the breakthroughs, but it cannot afford to lose momentum when it matters most. Deeptech is where the puck is heading. Europe needs the conviction of capital to make sure we are in the game.
The report outlines several key trends shaping the ecosystem.
Deeptech investment in Europe reached $20.3 billion in 2025, representing a record 32 per cent of total venture capital, more than double its share a decade ago. While overall tech investment remains below its 2021 peak, deeptech funding has seen only a modest decline, indicating sustained investor confidence.
Source: The 2026 European Deeptech Report
In terms of geography, the UK attracted the largest share of funding, followed by France and Germany, with Paris emerging as Europe’s leading deeptech hub. Several cities, including Paris, Cambridge, London, Munich, Stockholm, and Zurich, now rank among the world’s top ecosystems.
At the sector level, the Future of Compute segment recorded the fastest growth, while defence-related investment also increased significantly. Defence, security, and resilience now account for a substantial share of total funding, reflecting growing demand for sovereign capabilities. Other expanding areas include AI, computational biology and chemistry, as well as space, robotics, and energy.
Source: The 2026 European Deeptech Report
Despite this momentum, structural challenges remain. A significant share of late-stage funding comes from non-European investors, and companies tend to raise smaller rounds and scale more slowly than their US counterparts, contributing to a persistent growth-stage funding gap. In parallel, many deeptech companies originate from research spinouts, particularly in photonics and quantum, while relatively few founders have prior startup experience.
Source: The 2026 European Deeptech Report
The exit environment also remains constrained, with more than 80 per cent of exits driven by M&A and much of the value captured by US acquirers, while European public markets showed limited activity in 2025.
Addressing the growth-stage funding gap and strengthening local capital availability will be key to enabling Europe to scale its next generation of deeptech companies.