Europe overtakes Asia on deep tech investment

Behind the US, but overtaken Asia

Despite the growing importance of deep tech, Europe still lags far behind the US when it comes to investment. This year to 30 September, US deep tech firms raised $52 billion, compared to just $14 billion in Europe, and $13 billion in Asia. The rise in deep tech investment in the US is largely driven by AI and machine learning, the report notes. 

Of the world’s top ten best funded deep tech firms, eight are based in the US, with the list being led by OpenAI, self-driving car firm Waymo, SpaceX, and AI firm Anthropic. Sweden’s Northvolt is fifth on the list, but it’s currently struggling to fend off bankruptcy. The other European deep tech firm in the top ten is green steel firm Stegra, also based in Sweden, which has raised $2.4 billion. 

But it’s not all bad news for Europe. The report shows that in 2024, for the first time the continent raised more capital for deep tech firms than Asia. 

Europe overtakes China on AI funding

On AI funding, there’s a similar story. Europe still lags far behind the US, raising $11 billion to the US’s $47 billion in 2024. 

But over the last decade, Europe has caught up with China, partly because the continent has raised more capital itself, and partly because Chinese investment has dropped off. 

EU rules seen as a drag

Respondents to a survey also generally thought new EU legislation, like the General Data Protection Regulation, the AI Act, the Digital Markets Act and the Digital Services Act made it harder to start and scale a company in Europe. This will bolster the case of returning Commission president Ursula von der Leyen, who has called on all new commissioners to cut back on red tape. 

“The high levels of optimism seen over the past decade are being eroded, with challenges including the lack of progress on regulatory reforms, market harmonisation and greater access to funding cited by our respondents,” the report says. 

Estonia leads the VC world

Although the US still has the venture capital market Europe wants to emulate, accounting for the size of its economy, Estonia actually attracts more venture capital funding, according to a ranking of VC funding as a share of GDP. 

Of the top 30 countries globally, 17 are from Europe. But, the report notes, some big European nations are far down the list, including Spain at 34th and Italy at 60th, “behind a number of developing countries.

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Publish date : 2024-11-20 16:00:00

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