Europe builds 45 percent of deep tech startups. Why is the capital flowing elsewhere?

Europe faces a veritable deep tech paradox. As the Global Deep Tech Report 2026 reveals, 45 percent of all deep tech startups worldwide originate in Europe. At the same time, Europe's share of global funding volume is a mere 17 percent.

Germany too It is falling short of its economic potential. With around 500 deeptech startups, Germany ranks fifth worldwide. Great Britain has around 1,100 companies, and France about 800.

This development is of particular importance for the European startup ecosystem. After all, deeptech companies are considered key drivers of technological sovereignty, industrial transformation, and future economic growth.

Deeptech founders are highly qualified

The report shows that European founders do not lack scientific excellence. 61 percent of DeeptechFounders typically hold a master's degree or doctorate. Engineering, computer science, and management are particularly common fields of study.

At the same time, the data reveals structural differences compared to North America. For example, 36 percent of European founders have prior entrepreneurial experience, while in North America this figure is 43 percent. Europe also lags behind North America in terms of deeptech experience, with 24 percent compared to 33 percent in North America. Fourteen percent have studied at one of the world's top 10 universities, compared to 29 percent in North America.

The figures suggest that Europe's startup scene has different prerequisites than its North American counterpart. While scientific expertise is often present, entrepreneurial experience, which can be crucial for scaling and international expansion, is frequently lacking.

Series A to Series B ratio of only 10 percent

The situation regarding growth financing is particularly critical. The conversion rate from Series A to Series B funding is only 10 percent in Europe. In North America, by contrast, 24 percent of companies reach this next financing stage.

For investors, this confirms a familiar pattern, as many deeptech companies fail not because of their technology, but because of a lack of capital during the scaling phase.

The “Valley of Death” remains the greatest challenge

According to the Global Deep Tech Report, more than 90 percent of deep tech startups fail due to funding gaps, not technological deficiencies. Developing market-ready products, regulatory requirements, and long industrialization cycles significantly increase capital needs.

Therefore, hybrid financing models are becoming increasingly important. The combination of venture capital, public funding, grants, and debt capital can help bridge critical development phases and stabilize the capital base in the long term.

Europe's scale-up problem is slowing down exits

In addition to financing, the report reveals further structural challenges. The M&A exit rate in North America is 8 percent, twice as high as in Europe, where it is only 4 percent. Furthermore, there is a significant scaling bottleneck. While 81 percent of European deep tech startups employ a maximum of 50 people, this figure is 68 percent in North America.

Europe's deep tech sector could generate a company value of €1 trillion and up to 1 million jobs by 2030. But this will only happen if there is a fundamental rethink of how capital is deployed. We need more investors who understand that deep tech is not a sprint – it's an ultramarathon that demands endurance, trust, and a willingness to build industry-defining companies over decades.