Whether through public initiatives or the growing involvement of private investors well versed in the specificities of deeptech, Europe is accelerating its efforts to address its weaknesses in scaling up its most strategic companies. While financing at more advanced stages of growth, exits, and proximity to established industrial players remain key challenges, the sector is also showing genuine signs of maturity.
This is a long-standing issue in discussions on the financing of European innovation. Europe has become fertile ground for company creation, enabling start-ups to emerge and begin to grow. Scaling up and securing domestic financing to support it often proves more difficult, particularly when start-ups need to raise substantial funding rounds to industrialise, significantly ramp up operations or acquire the firepower required to become genuinely competitive champions.
While the issue is far from new, it has become even more acute in the age of artificial intelligence (AI), as highlighted in a recent parliamentary report once again drawing attention to the European “late-stage gap”. AI is a strategic breakthrough technology, and companies specialising in certain verticals face particularly high capital requirements much like their counterparts across the broader deeptech ecosystem.
Initiatives designed to strengthen and expand this pool of start-ups are multiplying. In France, Bpifrance’s “Deeptech Plan”, operated as part of the France 2030 programme, plays a central role. At European level, the European Commission is in the process of setting up a “Scale-up Europe” fund based on a public-private partnership, aimed at financing the growth of strategic European companies, with a strong focus on several deeptech sectors.
France has also seen the emergence of a number of investment funds dedicated to the theme, including Jolt Capital and Supernova Invest. The latter recently launched Supernova Tech Scale II, its second late-stage fund dedicated to financing European deeptech scale-ups, with a target size of €300 million. As a specialist in the field, the asset management company counts several flagship French deeptechsamong its portfolio companies, including Loft Orbital and Unseenlabs in new space, Alice & Bob in quantum computing, and Expliseat, whose technology aims to decarbonise air transport.
French deeptech is clearly gaining momentum and offering strong deal flow for investors. According to the latest figures from Bpifrance, the number of deeptech start-ups created each year in France increased by a factor of 2.3 between 2018 and 2024, while the country accounts for 20% of all deeptech fundraising in Europe. At continental level, the ecosystem remains equally dynamic.
“The core assumption is that Europe does not suffer from a lack of innovation, thanks to the strength of its scientific base and the support mechanisms available. This know-how now translates into significant market depth and a growing number of financing opportunities. Since 2021, nearly 200 deeptech start-ups have been raising growth-stage rounds every year, a figure that has held up despite a particularly challenging environment,” notes Étienne Moreau, partner at Supernova Invest, in an interview with WanSquare.
A specific playing field
Investing in deeptech requires a deep understanding of its specific rules, given the high level of technical complexity involved. Technologies are often born in research laboratories, and business models are frequently industrial in nature. That said, deeptech companies also benefit from well-established strengths. Their intellectual property creates significant barriers to entry, allowing them to avoid excessive capital expenditure to acquire customers before generating revenues.
Beyond venture capital funds, this proposition can also appeal to established industrial players, as illustrated by the €1.3 billion investment made by ASML in Mistral AI’s latest funding round, accompanied by a strategic partnership. “This deal sets an important example for the growth of European deeptechs, because what is still missing is closer involvement from major industrial players both as investors and as acquirers. Even before the AI wave, GAFAM companies were already highly active in M&A in this space, whereas the only truly significant transaction in France was Safran’s acquisition of Preligens in 2024,” says Étienne Moreau.
Last year, 24 exits were recorded in the French deeptech segment, including Preligens (€220 million), biotech company Amolyt Pharma acquired by AstraZeneca for €960 million, and Grenoble-based semiconductor company Unity SC, acquired by Germany’s Merck, a former Supernova Invest portfolio company. Three companies from the first vintage of its growth fund are currently under mandate for sale. Alongside Unity SC, the exit of Sonivie (healthcare, acquired by Boston Scientific) resulted in a transaction valued at $600 million.
These transactions confirm that deeptech companies are capable of delivering returns and represent attractive investment opportunities. According to Bpifrance, the average exit value over the 2020–2024 period has tripled compared with the previous four years, reaching €118 million. Questions around performance nevertheless remain, particularly as US players are generally willing to pay higher valuations than their European counterparts, a trend especially visible in the healthcare sector.
Is this necessarily bad news? For a deeptech ecosystem to grow and scale, exits abroad can also be interpreted as positive signals.
Comparing like with like
Étienne Moreau points to the example of Israel’s ecosystem, particularly in cybersecurity, which has developed around a clear model: companies are founded and grow through their early stages domestically, founders then move quickly to the United States to sell their businesses, before returning to strengthen their home ecosystem. Capital is reinvested in local funds, synergies are developed with national companies, and research and development centres are established, delivering benefits for both companies and investors.
“French or European entrepreneurs achieving exits in the United States should not necessarily be seen as a failure. Access to a global ecosystem is essential to ensure liquidity can be recycled and to allow a community of repeat entrepreneurs to emerge,” he argues.
Meanwhile, the race to build technological champions in the most strategic sectors of the economy remains far from won. The gap between Europe and the United States is still significant: between 2016 and 2024, only twelve European venture capital funds raised more than $1 billion, compared with 157 in the US. Over a ten-year lifespan, a European start-up typically raises 50% less capital than a comparable company in San Francisco, according to a parliamentary report published in September.
On other fronts, however, Europe has made substantial progress, particularly in company creation and early-stage financing. Comparisons must also be put into perspective depending on the sectors under review. “We are comparing two very different ecosystems. One is fully mature; we are not operating on the same timeline. In Europe, the mature segment is late stage (from Series B to Series D) typically between €20 million and €100 million in deeptech. A fund like ours participates in four or five such transactions each year. Within two or three years, these start-ups will significantly increase the number of ‘growth’ companies raising rounds above €100 million. Today there are around twenty; tomorrow there could be 50 or even 80,” Étienne Moreau hopes.
This promising trend does not obscure more structural issues that continue to constrain the financing of Europe’s technological champions, including the structure of European savings, fragmented capital markets and a less developed risk culture. “In late-stage financing, Europe is slowly building capacity. Naturally, as investors, we would like to see more established players willing to back us, and for fundraising (both ours and that of our peers) to be easier. Fund-of-funds investors also remain cautious about allocating a meaningful share to venture capital as part of a diversification strategy. But in many ways, these challenges simply reflect the current stage of development of our ecosystem,” says Étienne Moreau, adding: “Now is the time to rally behind the funds that deliver performance Sovereignty is not something you declare, it’s something you finance. We must strengthen the capabilities of tech players who are constantly pushing the boundaries of innovation in Europe, so that true continental champions can emerge.”
The scale of the challenge is, in any case, clearly identified at least in France. According to the Directorate General for Enterprise, €30 billion will be required by 2030 to support deeptech start-ups throughout their entire development cycle and meet the challenge of scaling up.
