The Boston Consulting Group proposes pathways how European corporates could benefit from the deep tech wave and make an impact in this sector.
Deep tech technologies are changing the world. They also offer opportunities for European industries and will be crucial in tackling global challenges. The Boston Consulting Group (BCG) published a report specifically shedding light on European corporates and their role in this rapidly evolving sector. According to BCG, “the total value pools of the top ten deep tech sectors worldwide could reach €8 trillion by 2030”. By ‘value pools’, one should understand the sum of revenues and avoided costs. This amount represents almost half of the projected GDP of the EU’s 27 member states.
Deep tech development also comes with a set of challenges: (i) stamina, (ii) financial strength, and (iii) agility. Stamina in the sense that deep tech start-ups take, on average, 35 percent longer to grow their revenue from $1 to $5 million and 39 percent longer from $5 to $10 million compared to regular start-ups. Financial resilience is critical, as capital expenditures (CAPEX) in this sector are substantially higher than in others, leading to significant cash burn for start-ups during their early stages. Additionally, agility is essential, as these innovative approaches carry considerable risks concerning technical and commercial viability, requiring swift adaptability and creative problem-solving to overcome challenges effectively. Yet, while deep pockets are needed to support these risky endeavours, they also come with high returns for investors. Hence, global venture capital (VC) and private equity in the sector have risen from 10 to 20 percent since 2014, as this field represents an interesting asset class for diversifying investment portfolios.
European corporates are uniquely positioned to unlock deep tech’s potential by translating innovations into real-world applications. Their financial and operational strength allows them to bridge the gap from the fab to the market. Beyond funding, building robust deep tech ecosystems is critical for success. These ecosystems should facilitate rapid intellectual property transfer, offer ‘sandboxes’ to safely test innovations, and promote early collaboration between researchers and businesses. Europe has all the ingredients (at mixed maturity levels) to create a world-leading deep tech ecosystem: start-ups, corporates, universities and research institutions, governmental agencies, regulators and VC. In the report, the ecosystem example around the Technical University of Munich (TUM) and the TUM Venture Labs provides an integrated ecosystem that brings together academia, industry, and entrepreneurial support to accelerate the development of groundbreaking technologies. According to a recent feature from Forbes, Switzerland emerged as Europe’s most exciting tech hub for innovation – with key hubs around Zurich and the Lemanic Arc – overtaking traditional powerhouses like Berlin and London. This rise is driven by consistent private investments in research, a supportive business climate, and top-tier academia, which attracted tech giants to establish offices in Switzerland with substantial R&D teams.
To capture the value of deep tech, corporates must answer two key questions: where to play and how to win. BCG suggests analysing technologies based on their maturity (readiness for commercial use) and traction (global attention). For instance, large language models (LLMs) are high-traction and high-maturity, signalling ‘innovation at scale’, while blockchain is considered low-traction but high-maturity, representing a ‘proven concept’. By identifying high-potential breakthroughs relevant to their industries, corporates can focus on areas with the greatest impact.
Corporates can engage as ‘shapers’ or ‘amplifiers’. Shapers influence early strategic decisions by investing capital, expertise, and resources. They identify use cases, connect with suppliers, and build partnerships to advance industrial challenges. Amplifiers, on the other hand, act as first customers (‘venture clienting’), accelerating commercialisation and scaling technologies. Amazon’s acquisition of Kiva Systems is a great example of this since – thanks to Kiva’s robotic technology – Amazon could significantly improve its operation in warehouses without increasing costs. With Kiva’s efficient robotic system, Amazon even spared around $3 billion per year after five years, quickly paying back the acquisition price of $775 million.
By adopting a systematic approach to where corporates should engage and how to maximise the impact of this commitment, EU companies can become key players in developing the next technological leaps, thus capturing a portion of the revenues stemming from these breakthroughs. This leadership will be vital for Europe’s prosperity and competitiveness in the coming decades, positioning the region as a global leader in innovation. With the recently adopted Work Programme 2025, the European Innovation Council (EIC), part of the EU research and innovation programme Horizon Europe, will play a crucial role in supporting the European deep tech sector in the future, notably with the approved budget of €1.4 billion next year, representing an increase of €200 million in comparison with 2024.