This is not a story about European founders failing to build competitive companies. It is a story about where the capital to scale those companies is coming from, and who ends up in control when the exit arrives.

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The Structural Problem

The 2026 European Deep Tech Report puts the annual funding shortfall for European deep tech at growth stage between $4 billion and $24 billion. The range reflects genuine uncertainty about what capital is available but not being deployed versus what simply does not exist. Either end of that range represents a serious structural deficit.

The consequence of that gap is visible in the acquisition data. The United States accounts for 73% of European deep tech acquisition value. Europe builds the companies. American acquirers buy them. The intellectual property, the talent, and the compounding economic value created by those technologies leave the continent. This is not a market inefficiency that self-corrects. It is a capital allocation problem that reproduces itself at scale.

The stakes are real. VC-backed European deep tech companies are now valued at $690 billion in aggregate, according to Dealroom and Tech.eu's 2026 report. That is a significant base of industrial and scientific value. The question is who funds the growth phase, and who collects the long-term returns.

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The Capital That Does Show Up

The $690 billion valuation figure is not abstract. It reflects genuine scientific and commercial depth. ETH Zurich and EPFL rank among the world's leading universities for deep tech founder creation and spinout generation. Europe produces world-class quantum, biotech, materials, and defence technology companies. The early-stage ecosystem has developed meaningfully over the past decade.

Early-stage capital has also grown. Seed and Series A rounds have become more available, with the European Investment Council, national development banks, and a maturing cohort of specialist funds all increasing deployment. Defence tech recorded $5.2 billion in European VC investment in 2024, a record for the sector and a signal that capital markets are beginning to align with geopolitical realities.

The problem is not whether European deep tech can raise a seed round. It is whether European deep tech can raise a Series B without crossing the Atlantic to do it.

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The Series B Desert

Eighty-seven percent of dedicated European deep tech funds are too small to lead a Series B. That is the defining constraint. When a company needs a $50 million to $150 million growth round to move from validated technology to scaled commercial operation, the European fund landscape mostly cannot provide it.

The consequences are predictable. European founders face a choice between taking American capital on American terms, accepting slower growth, or relocating. Many choose the first option. The capital arrives, but with it comes board composition, strategic alignment, and eventual exit preferences that point toward the US market. The company remains nominally European, but its capital structure and trajectory have changed.

This is the Series B desert: not a complete absence of capital, but a systematic mismatch between the scale of funding required and the scale of funds available to provide it. The gap does not close through optimism. It closes through the formation of larger, dedicated growth-stage vehicles with the mandate and the size to lead rounds that matter.

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Where European Capital Is Forming

There are signs that the structural gap is being addressed, though not yet at the speed or scale the problem demands.

Kembara completed a €750 million first close against a €1 billion target fund in 2025, making it Europe's largest dedicated deep tech growth fund. That single vehicle represents a meaningful addition to the growth-stage landscape. It is not sufficient on its own, but it establishes a proof of concept: a European fund at growth-stage scale can be raised, and institutional investors will commit to it.

The defence sector is the clearest signal of where capital formation is accelerating. The $5.2 billion that flowed into European defence tech VC in 2024 reflects both geopolitical urgency and investor recognition that dual-use technology carries genuine commercial value beyond government contracts. New funds announced in Q1 2026 continue to target the defence and security technology space, where Europe has both sovereign need and competitive advantage.

The pattern that needs to repeat across quantum, advanced materials, biotech, and energy is now visible in defence. A geopolitical catalyst. A recognition of strategic dependency. Capital formation at the scale needed to sustain growth-stage companies. Europe is learning how to build the infrastructure its deep tech sector requires. The question is whether it can do so quickly enough.

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DTM26 and the Investor Connect

Capital formation does not happen in the abstract. It happens through relationships, conviction-building, and the accumulated effect of repeated interactions between founders and the investors who have the mandate and scale to back them. That is what the Investor Connect track at DTM26 is designed to create.

Deep Tech Momentum 2026 brings together more than 3,000 attendees and 800 industry leaders in Berlin on 20 and 21 May. The Investor Connect track is built specifically around the late-stage capital question: how European deep tech companies find the growth-stage funding they need, and how European investors build the conviction and deal flow to deploy at that scale.

The investor speakers confirmed for DTM26 include figures who have operated at the frontier of this problem across multiple cycles. Hermann Hauser, Co-Founder of Amadeus Capital Partners, has backed deep tech companies since before the category had a name. Hendrik Brandis, Co-Founder of Earlybird, brings decades of European venture experience and a clear view of where the continent's capital markets need to develop. Thomas Oehl, General Partner at Vsquared Ventures, works with deep tech founders navigating the precise growth-stage challenge the report identifies. Tae Hea Nahm, Co-Founding Managing Director of Storm Ventures, represents the transatlantic investor perspective: understanding why American capital flows into European deep tech and what it would take to replace that dependency with homegrown alternatives.

These are not panels assembled for optics. They are conversations the European deep tech ecosystem needs to have on record, with the people positioned to act on them.

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The Path Forward

The 2026 European Deep Tech Report does not describe an insurmountable problem. It describes a capital allocation gap with identifiable causes and addressable solutions. Larger dedicated funds, deeper LP commitment from European institutional investors, and more active coordination between public development finance and private growth-stage capital are the levers. None of them are exotic. All of them require sustained effort and deliberate decision-making.

What the report makes clear is that the status quo is not neutral. Every funding cycle in which European deep tech companies take American growth-stage capital instead of European capital is a cycle in which exit value, strategic control, and compounding economic returns flow westward. The $690 billion valuation of VC-backed European deep tech companies is an asset. The question is who captures the returns as those companies scale.

DTM26 is where that question gets put to the people with the authority to answer it.

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If you represent a fund, a family office, a corporate venture arm, or an institutional investor with a mandate to deploy into European deep tech, the Investor Pass for DTM26 is the most direct route to the conversations, the deal flow, and the relationships that define this market. You can see the full investor attendee profile at DTM26 and review the Investor Connect session track before registering.

The gap is real. The solutions are being built. Berlin, 20 to 21 May.

Secure your Investor Pass for DTM26.