DeepTech analysts and experts predict technological breakthroughs in energy storage, artificial intelligence, defense, and quantum computing in 2025. DeepTech companies aim to change the world through scientific, engineering, and technological advances.
As technology advances, researchers seek to apply engineering and technological advances in areas such as processing and computing architecture, semiconductors and electronics, materials science, vision and speech technologies, AI and machine learning, and more.
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Quantum computers scale up
Quantum computers continue to evolve with increasing numbers of interconnected physical qubits in various qubit implementations. As these systems scale, the need for quantum intra- and interconnectivity becomes increasingly apparent. Distributed and networked quantum computers, thanks to innovations in quantum transducers, repeaters, and switches, will enable this scaling.
With the development of quantum technologies, additional security risks are bound to emerge, on top of the existing security concerns. NIST has introduced new standards for post-quantum cryptography, and replacing existing cryptography will be both a huge challenge and an opportunity. We also expect innovation in cryptography and security, and AI will likely play a bigger role in this area than ever before.
Active investment in quantum computing
Europe has historically lagged behind the US and, to a lesser extent, China in developing quantum computing technologies, both in terms of hardware and software. This is changing rapidly with the emergence of a large number of increasingly well-funded startups, such as Plancq (Germany), Pasqal (France), Universal Quantum (UK/Germany), Quantum Circuits (US) and Quandela (France/Germany).
Given the sovereign aspects of the quantum computing race, we expect continued investment in European companies at relatively high valuations, as well as a push to build a commercial and partner ecosystem around them.
Wider use of AI
Artificial narrow intelligence (AI applied to specific problems) has found its application in many verticals, but there are still many industries that can benefit from AI advances. We expect to see more AI in industries such as agriculture, healthcare, and cybersecurity.
As these models become more complex, the field of machine learning operations (MLOps) is likely to grow even more. The development of artificial general intelligence (AI that can learn to solve many problems) will raise ethical concerns.
AI will allow battery management
In the face of global energy supply challenges, the ability to optimize energy consumption is paramount. Likewise, for the EV market to realize its potential, the industry still needs to invest in layers of battery management systems that are context-aware and can comprehensively manage not only battery depletion but also battery charging. AI is critical to enabling both use cases.
We expect to see major corporate players in energy, building management, automotive and mobility, including their supply chains, actively investing and acquiring assets in the AI implementation space.
Battery technology will be in focus
Redoubling efforts to optimize energy consumption will be a key priority in climate technology. Partly out of necessity, energy storage will gain momentum, especially at the industrial level. New and reusable batteries will benefit from the dry powder of climate venture funds.
Alternatives to lithium-ion batteries for energy storage – from alternative metals to new technologies like flow batteries – these new technologies will receive more attention. Reasons:
We are witnessing an energy crisis in Europe. At the current rate of consumption and with the geopolitical and macroeconomic environment looking increasingly bleak, Europe is likely to exhaust its energy reserves.
European DeepTech Companies Will Aim for Sovereignty
The momentum towards greater national sovereignty and European autonomy will grow. In this regard, defense spending will also become a more important factor, as in the US. While these major trends will lead to increased government support and spending, a specific strategy for a deep tech company to position itself in the new reality will become even more important.
Generative AI Will Reach Europe
AI technologies will be used to generate content based on language, images, and video, and will impact everything related to marketing and customer engagement. AI-powered content generation is currently just the tip of the iceberg and will evolve into a variety of content possibilities, including interactive and dynamic content, as well as movies that adapt to each viewer.
New DeepTech Breakthroughs in Healthcare and Defense
The next big breakthroughs in deep tech will be in biotech and healthcare. We will see predictive diagnostics and precision therapeutics companies, as well as a new wave of medicine and therapies specifically designed for women.
In addition, the economic downturn, war in Europe and rising tensions between East and West will lead to innovation in European companies developing sensors, space technology, hardware, data and AI, with an emphasis on dual-use technologies.
Tech sector involved in clinical trials
In 2024, we will see another private tech company acquire a traditional biotech to increase its clinical trials expertise.
Over the past few years, we’ve seen AI-designed drugs reach phase 1 clinical trials — Exscientia, Insilico, and Recursion have been leaders in this area. Generative AI and large language models have the potential to greatly improve the efficiency of these efforts. Alpha Fold was the breakthrough of 2021, but it’s just the beginning.
But companies built as technology platforms often have a long way to go before they can launch their own clinical programs. It’s not as simple as hiring a couple of experts and hitting the “go” button — the processes, policies, and expertise needed to ensure that drugs don’t cause harm can be foreign concepts to companies with machine learning and engineering. Platform companies that recognize this gap in their capabilities will reap the rewards.
Tech Leaps Across Deep Tech Sectors
We foresee exciting developments in the coming years. In particular, breakthroughs in materials science will enable a new generation of batteries with new levels of performance, making exciting use cases such as e-aviation commercially attractive. The availability of experimental data at scale and new predictive models will lead to exciting new developments in biochemistry.
The fields of automation and AI-enabled robotics seem to be increasingly fulfilling their long-term promise of actually delivering significant productivity gains. Last but not least, in 2024, the first private European rocket will be launched into low Earth orbit, ushering in a new era and momentum for the European space ecosystem.
10 DeepTech Unicorn Startups in Europe:
There are 10 of the most prominent Deeptech unicorn startups in the European tech ecosystem:
- Celonis is a €13 billion mining company.
- Northvolt is a €12 billion electric vehicle battery manufacturer.
- Incredible: The gaming business in the metaverse is valued at 3.4 billion euros.
- CMR Surgical is a €3 billion medical robotics company.
- Graphcore is a €2.4 billion AI chip business.
- OCSiAl Group – producers of graphene nanotubes valued at 2 billion euros.
- Exotec – scaling robotics and automation worth €2 billion.
- Volocopter – Electric flying taxis worth 1.7 billion euros.
- Cognite is a €1.6 billion machine learning solution for business operations.
- MindMaze – €1.5 billion virtual reality interfaces for medical rehabilitation.
AI will spread to biology, energy and cybersecurity
Artificial intelligence is predicted to become an important technology in all industries. Significant progress can be expected in the near future. For example, AI can be used to decipher complex biological processes or applied in the energy sector to manage renewable energy generation and decentralized power grids.
The focus will be on IT security solutions, as they are critical to the security of our economic and social infrastructure. There is a growing demand for advanced threat detection capabilities, as well as automated testing and analysis platforms.
The Metaverse is still on the edge of fantasy
The metaverse is not a single continuum, but rather an interaction between digital platforms and products in Web2 and Web3 and the ways of consuming them. After the hype a year ago, the hype around the metaverse is fading, today tech experts and investors understand that the metaverse is not interesting to the general public, it is just a niche for gamers.
The evolution of devices such as VR headsets, digital glasses, smartphones and other devices act as assistive devices and will allow users to access three-dimensional virtual or augmented reality in which they can work, communicate with friends, conduct business, visit remote locations and access educational opportunities, all in an environment mediated by technology in new and exciting ways.
One area to watch for the metaverse is the workplace. Companies like Nvidia and Microsoft, as well as one of our portfolio companies, Engage XR, have developed platforms for collaborating on digital projects. The use of AR and VR for training in organizations will continue to grow this year.
The Challenges of the Deep Tech Industry
While DeepTech has great potential, it is still a long way from mass adoption. The industry faces a number of unique challenges today. Future adoption will depend largely on how quickly the industry can overcome these challenges. Key challenges include:
Securing funding. Despite the initiatives of several global governments, Dee Tech projects often have a hard time getting funding. Often, the duration of the research can be stretched out without any real guarantee of success. Funding is more likely to go to organizations developing consumer products, as the return on investment is seen earlier and is easier to measure, especially in the early stages.
Identifying market opportunities. Researchers developing DeepTech solutions and products may not be able to identify opportunities to present their developments from both a marketing and economic perspective. Very often, these companies rely on other channels or third-party services for the right marketing strategy and planning. This is where working with incubators or government bodies becomes crucial – countries that provide this opportunity through a well-defined ecosystem will lead the deeptech revolution.
Scalable development. Many DeepTech innovations get stuck at the proof-of-concept stage – not because they are not innovative enough, but because they do not scale to mass production. This requires the right infrastructure, as well as a deep understanding of how products and services can be commercialized.
There are several global companies trying to change entire industries with their inventive proposals. We are witnessing some groundbreaking innovations in autonomous vehicles, food technology, computer vision, artificial intelligence, weather forecasting, clean energy solutions – the list goes on – that will benefit us in the future.
