A new report has claimed that DeepTech is the second most promising area of investment behind EnviroTech.

The European Deep Tech Report for 2023 – published by Dealroom, Lakestar and Walden Catalyst Ventures – is an in-depth analysis of the state of DeepTech in Europe. 

The report provides an overview of the key trends and developments in the industry, as well as insight into the challenges and opportunities facing startups in the sector.

It found that European DeepTech startups raised $17.7 billion in 2022, 22% less than in 2021 but 60% more than in 2020. 

In Q3 and Q4 of 2022, the DeepTech sector had the second-highest growth rate for venture capital funding behind energy. In that period funding dropped by 9% compared with 2021, but that pales in comparison to the 45% drop in the overall VC market. 

The four main emerging areas of DeepTech – novel AI, future of computing, novel energy and space tech – generated record-breaking levels of capital, $4.4bn, in 2022.

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The report calls for the potential of academic spinouts to be recognised by bridging the gap between early-stage dedicated DeepTech investors and generalist funds.

“The approach and process used to invest in DeepTech is often quite different from traditional SaaS investing. It requires a unique investor skillset, a specialised bottom-up investment strategy and the ability to operate independently,” said Steven Jacobs, venture partner (Deep Tech) & chief product officer at Lakestar.

Nicolas Autret, partner at Walden Catalyst Ventures, added: “We are looking for the next Marie Curie or Max Planck, scientists and entrepreneurs taking disruptive technologies out of the lab and turning them into commercial products. 

“Distributed at global scale, these technologies eventually make their way into everyone’s life, and have the potential to solve some of the many challenges humanity is facing.”

The report is available for download on the Dealroom website, as well as the websites of Lakestar and Walden Catalyst Ventures.

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