Europe builds the deep tech and exports the upside: the funding gap

Europe has a deep tech funding gap, not a deep tech shortage. The continent produces roughly twice as many science and engineering graduates as the United States and hosts about 30% of the world's leading deep tech universities, yet 70% of late-stage capital for its deep tech companies now comes from outside Europe — chiefly the US. Europe builds; others bank the upside.

What is the European deeptech funding gap?

The gap is the distance between where deep tech is created and where it is financed at scale. Europe is strong at the front of the pipeline — research, founders, spinouts, seed and Series A — and structurally weak at the back, where companies need the eight- and nine-figure rounds that decide who owns the category. Capital is not absent from Europe; the channels that turn it into growth-stage cheques are. The result is a quiet, compounding transfer: the science is European, the equity, the jobs and the eventual exit value increasingly are not.

This is not a lament about Europe being behind. It is a statement about where the value leaks — and leaks are addressable. The data below is report-grade and sourced; the conclusion is an operating one. Anyone serious about deeptech investing in Europe has to start from the numbers, not the narrative.

How big is the gap? The numbers

The figures are consistent across the major trackers — Dealroom, Atomico's State of European Tech, and the European Innovation Council. Key benchmarks: Europe's share of global deep tech VC fell from 19.5% in 2016 to 5.8% in 2026. Approximately 70% of late-stage deep tech funding is sourced outside Europe, mainly from the US. Only 54% of rounds above $15M are funded from within Europe, versus 80% in the US. US AI investment outpaced European AI investment by roughly 12× in 2025. European deep tech VC raised $20.3B in 2025, yet Europe captured just 6% of global VC for AI chips and processors between 2022 and 2025. US firms are roughly twice as likely as European peers to land a $50M-plus round. Atomico puts cumulative European tech underfunding at ~$375B over the decade, and estimates a ~$210B additional opportunity from matching US pension and endowment allocations (sources: Dealroom; Atomico, State of European Tech 2025; European Innovation Council).

Read together, two facts stand out. First, Europe's relative position has collapsed even as its absolute numbers grew — its slice of global deep tech VC fell from roughly a fifth to under a sixteenth in a decade. Second, the gap is not evenly distributed across the lifecycle. Early-stage Europe is competitive; late-stage Europe is not. US companies are about twice as likely to land a $50M-plus round, and for cheques above $15M, only 54% of European deep tech funding originates in Europe versus 80% domestic financing in the American market.

That last comparison is the whole argument in one line. An American deep tech company raises its growth round from American capital and stays American. A European one, past Series A, increasingly raises from abroad — and with the money comes a gravitational pull.

Why does talent and IP leave with the capital?

Because growth capital is never just money. The lead investor in a $100M round shapes the board, the next hires, the headquarters of record, the choice of acquirer. Dealroom's own phrasing is precise: beyond Series A, European companies “raise smaller rounds, sell, or take capital from overseas,” which “often results in a shift in the ‘geographic centre of mass’ of the business away from Europe.” The cap table moves first; the org chart follows.

The exit data confirms it. More than 80% of European deep tech exits are acquisitions, and US buyers capture the majority of that value. Europe runs the most expensive part of the innovation pipeline — basic research, doctoral training, the unglamorous decade before a product — and then hands the commercial harvest to whoever shows up with the growth cheque. The continent has the deepest talent bench in the world; its problem has never been production, only retention. The same is now true of its companies.

This is why we treat the funding gap as a sovereignty problem rather than a financial curiosity. A continent that cannot finance the scaling of its own frontier technology does not own that technology in any meaningful sense — it rents it back, at the price of dependence. Our argument in Sovereign by design is that more of Europe's frontier infrastructure should be owned and governed from Europe. The funding gap is the mechanism by which the opposite happens.

Is the gap actually capital scarcity — or something else?

It is not scarcity. Europe sits on enormous household savings and underweight institutional allocations; Atomico estimates a ~$210B opportunity simply from matching US-style pension and endowment exposure to venture, and puts cumulative underfunding at roughly $375B over the decade. The capital exists. What is missing is the channel — the patient, locally anchored, risk-tolerant vehicles that convert dormant European savings into European growth equity.

That distinction matters because the two problems have different solutions. If Europe lacked capital, the answer would be to import more of it — and import the dependence with it. Because Europe lacks channels, the answer is to build them: domestic late-stage funds, listed vehicles that give European retail and institutions access to frontier assets, and operating firms that keep the centre of mass on the continent through the scaling years. Public efforts are moving in this direction — the EIC committed €1.4B to deep tech for 2026 and is preparing a privately managed Scaleup Europe Fund explicitly to “bridge the investment gap… while ensuring companies remain anchored in Europe.” Public money can prime the pump. It cannot, by itself, run a company.

What does an operator-investor do about it?

This is where our model is a direct response to the data rather than a slogan. Three commitments follow from the gap.

1. Build the channel, don't just complain about it. Pyratz Corp. is listed on Euronext Access Paris (ticker MLPTZ, ISIN FR0013371507) and is pursuing a path to an IPO and Euronext Growth listing in 2027, with a UCITS licence and first asset-management fund targeted for late 2026. A listed, European-anchored vehicle is, concretely, one of the missing channels: a way to route European public-market capital into frontier assets without exporting the cap table.

2. Bring operators, not just cheques. The funding gap is partly a capability gap — Europe's later rounds often go abroad because foreign capital arrives with scaling muscle attached. We close that locally by embedding senior builders inside the companies we back, the argument we make in Capital is not enough: the operator-investor model. A cheque buys a seat; operators help win the round that would otherwise have to be raised overseas.

3. Compound at the intersection of deeptech, regulatory moat and capital markets. The companies where Europe's edge is most defensible are the ones tangled in regulation and trust — exactly where a US growth round is least able to substitute for local depth. Our portfolio reflects this: Zama (fully homomorphic encryption for confidential computing, a French unicorn), Kiln (enterprise staking infrastructure), and the path toward regulated, confidential tokenised funds — confidentiality brought to on-chain finance — including the Zama × PyratzLabs joint venture Zaïffer for confidential, compliant on-chain finance. These are assets that are hard to relocate and harder to replicate. That is the point.

None of this closes a $375B gap on its own. But the gap does not close through a single fund or a single policy; it closes through the steady construction of European channels and European operating capability, one company at a time. That is the work — see how we structure it as a venture builder and where the portfolio compounds.

The window

Europe's deficits, read correctly, are preconditions for a leap rather than reasons for resignation — the “advantages of backwardness” Gerschenkron described, where late movers skip the incumbent's sunk stages and adopt the frontier directly. The continent already owns the research, the talent and, in domains like confidential computing, the chokepoint. What it has under-built is the financial machinery to keep the upside at home. The funding gap is not destiny. It is an instruction.

Frequently asked questions

What is the European deeptech funding gap?

It is the structural mismatch between where deep tech is created in Europe and where it is financed at scale. Europe is strong at research and early-stage funding but weak at growth-stage capital: about 70% of late-stage funding for European deep tech companies comes from outside Europe, mainly the US (source: Dealroom / EIC). The consequence is that talent, intellectual property and exit value increasingly leave with the foreign capital.

How much of Europe's late-stage deeptech funding comes from abroad?

Roughly 70% of late-stage deep tech funding is sourced outside Europe. For rounds above $15M, only 54% is financed from within Europe, compared with 80% domestic financing in the equivalent US market (source: Dealroom). This is the clearest single measure of the gap.

Does Europe lack capital for deep tech?

No — it lacks channels. European household savings are vast and institutional allocations to venture are light. Atomico estimates a ~$210B opportunity from matching US pension and endowment allocations, against ~$375B of cumulative tech underfunding over the past decade (source: State of European Tech 2025). The capital exists; the vehicles to deploy it locally are underbuilt.

Why does deeptech talent and IP leave Europe?

Because growth capital carries influence over boards, hiring and headquarters. When the decisive round comes from abroad, the company's ‘centre of mass’ shifts with it. More than 80% of European deep tech exits are acquisitions, with US buyers capturing most of the value (source: Dealroom).

How does an operator-investor address the funding gap?

By building European-anchored capital channels (including a listed vehicle and a planned asset-management fund), embedding senior operators inside portfolio companies so European rounds can be won locally, and concentrating on deeptech where regulation and trust make the European edge hard to relocate. See our operator-investor model.

Read the companion thesis, Asymmetric Innovation, or follow our investor relations updates for re-listing and fund news. For IR enquiries: investors@pyratzcorp.com.

This is not investment advice and not an offer or solicitation to buy or sell any security. Pyratz Corp. shares (MLPTZ / FR0013371507, Euronext Access Paris) trade on Euronext Access Paris following the re-listing; nothing here is a recommendation to deal. Figures cited are drawn from third-party sources (Dealroom, Atomico/State of European Tech, European Innovation Council) and are referenced for analysis, not as a forecast of returns.