Europe’s deep tech depends on university spinouts

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Deep tech has become a hot topic in Europe, with hopes that the region can have an edge over the rest of the world for innovation rooted in fundamental research. One of the key arguments: European countries have great universities and talent. But how can academic talent translate into startups? Let’s dive in. — Anna

Universities, a deep tech cauldron

“From startups to universities, we join forces to make Europe a world leader in the new wave of deep tech innovation!” European commissioner Mariya Gabriel tweeted earlier this week after her talk at the Tech.eu Summit in Brussels. As I noticed while attending the event, she was far from the only one to mention this topic enthusiastically.

That deep tech raises high hopes in Europe wasn’t exactly a surprise. Alex and I already wrote about Europe’s deep tech boom and investor interest in it earlier this year. But the role that educational institutions are expected to play piqued my interest.

“There is no doubt that the future of innovation in Europe will emerge from its world-leading universities,” Riam Kanso wrote in a Tech.eu guest post ahead of the event. Kanso is the founder of Conception X, which I had coincidentally heard about for the first time earlier this month. The U.K.-based nonprofit aims to transform Ph.D. researchers into venture scientists.

“It’s a simple but well-proven recipe,” Kanso said. “You have a Ph.D. team working on cutting-edge research with key real-world applications. They know their innovation could help discover effective treatments for now-incurable diseases, power up carbon-negative cities or tackle the future of automation. Through a combination of entrepreneurship training, access to pro-bono legal advice, funding opportunities and expert connections, we help them figure out how to turn their research into a viable deep tech startup.”

It isn’t a new thing for universities to more or less willingly give birth to spinoffs or spinouts (we will use the terms interchangeably here.) MIT, for instance, is famous for counting many entrepreneurs among its alumni, and quite a few of these ventures are based on intellectual property developed during their studies or research.

But in Europe, intellectual property can be a thorny issue. The “potential for meaningful innovation brewing across Europe’s research labs,” Kanso said, “largely remains untapped due to varying — and at times stifling — IP ownership rules that can make spinout companies uninvestable and hard to scale.”

Increasingly though, both European universities and venture capital firms are making efforts to make sure the most promising seeds turn into successful companies.

Mind the gap

Despite the hurdles, VCs looking for innovation know that spinouts are very much worth their attention. “As an investor in early-stage businesses, many with a deeply technical nature, we see universities as foundational to the companies we invest in,” said Simon King, himself a VC with a Ph.D.