Writing about Europe is difficult today. Russia is invading Ukraine as we write this, and world markets are in free fall. This is the political and military background of the continent.
Last week, this column focused on the deep technical expertise of the European technology market. The economic future of Europe, in other words.
We could have waited a day or two to put this sequel together. But since many of the comments below are positive about the future of Europe, it felt reasonable to continue.
The Exchange kicked off its look at European deep tech with a report from Angular Ventures. The data paints a picture of record capital disbursements to companies on the continent working on complicated, difficult to commercialize, fundamental technologies.
The Exchange explores startups, markets and money.
Read it every morning on Marketingwithanoy+ or get The Exchange’s newsletter every Saturday.
Today we discuss reactions to data from a number of European investors, including: Michael Jackson from the Cottonwood Technology Fund, Isabel Fox from Outsized Ventures, Nick Kingsbury and Andrea Traversone from Amadeus Capital Partners, and Cyril Bertrand from XAnge.
We summarize the data in question and then dive into different perspectives on where European deep tech investments are headed. The core views are that the pace of investment will slow slightly in 2022 from the record highs of 2021, that things seem stable so far and finally that this year could mark an acceleration in European investment in deep tech and startup activity.
To be fair to our sources, it’s worth noting that they started preparing their answers before today. But the prospect of war was already looming, so considerations about what it might mean for private markets not immune to stock plunges, cyber-attacks and other woes were already part of the conversation.
On the other hand, it goes without saying that some deep tech projects will reduce global – and thus European – dependence on oil, gas and other similar fuels. There is politics in technology, in other words; it is perhaps even clearer to say that technological change affects politics.
Traversone commented on this in an email to Marketingwithanoy, writing that “the current geopolitical situation is fueling” much more interest in “deep technology for healthcare and cybersecurity” and so-called “sovereign technology”, with the focus sometimes shifting to “strategic areas.” such as semiconductors, telecom equipment and energy technologies.”
Our starting point last week was Angular’s report, with one important caveat: It focused on both enterprise and deep tech investments. The linking of the two groups makes sense in a sense, as it helped to describe how the European venture capital market is shifting its focus away from consumer technology. But for our purposes, we want to be clear about what deep tech is and what isn’t.
Jackson argues that deep tech “can mean a lot of things…and because of the vague term it’s become, it means less and less.” We agree. And while we don’t want to narrow our focus too much, especially as new disciplines are added all the time, we want to make it clear that we too are talking about what Jackson describes as “the ‘deep’ end of the deep technology pool – robotics, semiconductors, energy transfer, medical equipment, hardware, all that fun stuff!”
What awaits us for deep tech in Europe
In the wake of a record-breaking venture capital market in 2021, seeing a small drop in the dollar or deal volume in 2022 would hardly be a retreat. At the same time, there are some venture capitalists who expect the European deep tech market to accelerate further. When examining our question, keep in mind that those who predict a slowdown are hardly pessimists; looking at deep tech investments in the continent in 2019 and 2020, they are likely still anticipating bullish results.