Why most deep tech never reaches the market – and how universities can change that

Europe produces world-class deep tech research and watches much of it stall before reaching the market. The latest UIIN brief, Why most deep tech never reaches the market, draws on over 75 expert interviews across Europe to explain why, and what universities can do about it.

The breakthroughs Europe cannot commercialise

Deep tech refers to technology rooted in scientific breakthroughs and engineering innovation: Quantum computing, synthetic biology, space technologies, new energy solutions, are just some examples of deep tech. Universities sit at the centre of this potential, producing the talent, research and intellectual property that underpin most deep tech breakthroughs. Unlocking that potential demands more than cutting-edge science, though. It requires bold funding policies, visionary investment and solid collaboration between academia, industry and public bodies.

Europe continues to lag behind the United States and China at translating scientific research into market applications, and the obstacles are largely self-inflicted. To compete, universities must go beyond their traditional role as knowledge producers and take up a role as innovation enablers, bridging the gap between lab and market so that research outcomes can scale, attract investment and find real-world application.

Three bottlenecks that stall innovation

Long timelines and cautious investors

Deep tech innovation often requires several years or even decades to reach market readiness, and those extended timelines carry far higher capital intensity than standard technology. The result is a funding bottleneck. Early-stage funding for proof-of-concept and prototyping is available through seed funds and EU grants, but later-stage funding remains scarce, pushing promising ventures towards US capital or failure. Nearly half of late-stage investment in European deep tech now comes from foreign venture capital.

A single market that is not single

Each member state maintains its own regulatory frameworks, legislation and quality control requirements for commercial use, so a cutting-edge med-tech solution approved in one country may still face obstacles elsewhere. For emerging technologies, Europe functions more as 27 distinct markets than one unified entity, which undermines the scalability of deep tech ventures and forces the ecosystem to be viewed nationally rather than jointly.

Spin-out terms that deter growth

Universities are natural incubators for deep tech, yet their spin-out policies around equity and licensing can unintentionally kill growth and founder motivation. Many European universities demand significant ownership stakes from the outset, which makes ventures less attractive to external funders reviewing the capitalisation table, since investors consistently favour founder-led start-ups where the founding team retains a majority. Rigid or expensive licensing terms compound the problem, delaying go-to-market efforts and triggering investor concerns, particularly in IP-heavy sectors like biotech.

From IP owners to innovation enablers

When universities try to maximise their initial ownership, they damage ventures at their most vulnerable stage, acting against long-term value creation. Instead, universities can do better as strategic partners offering balanced, commercially viable terms. Emerging practice points towards equity caps in the region of 5 to 10 per cent, milestone-based share vesting, and hybrid arrangements combining modest equity with royalties or revenue-sharing. The same logic applies to licensing, where adaptive strategies with transparent valuation benchmarks, phased royalty terms and performance-based benefits produce better outcomes for both sides. Initiatives such as the TTO Circle, hosted by the European Commission’s Joint Research Centre, and the European Knowledge Valorisation Platform are helping institutions benchmark against more agile counterparts.

Technology Transfer Offices sit at the centre of this shift, and their remit needs to widen beyond patent management and licensing agreements. Acting as matchmakers, TTOs can connect founding teams with experts, investors and interested industry partners, while helping those teams navigate the university’s own internal processes. Streamlining IP and licensing agreements does more than save time: It boosts investor confidence and makes spin-outs credible candidates for high-risk partnerships.

Universities can also act as connectors within the wider funding ecosystem, collaborating with regional accelerators and European initiatives, and leading consortia for schemes such as the EIT HEI Initiative or European Innovation Council acceleration programmes. Where an institution prefers to enable researchers rather than broker introductions directly, training on grant acquisition, consortium management and IP protection delivers similar value.

Skills, labs and political weight

A culture that rewards publication above market engagement leaves spin-outs poorly placed to attract public or private investment. As one Dutch professor put it, deep tech entrepreneurs need to understand that running a start-up involves much more than developing technology: They must learn about business operations, financial management and market strategies. Training tailored to deep tech, covering science communication, negotiation, business validation and financial forecasting from the pre-incubation stage onwards, is what turns researchers into founders capable of defining a value proposition and building the partnerships a venture needs.

Physical infrastructure matters just as much, given how hardware-intensive deep tech research tends to be. Early access to specialised laboratories, cutting-edge equipment and co-working space shortens development cycles, accelerates proof-of-concept work and eases the financial burden of sustaining R&D. Open Kitchen Labs in Amsterdam Science Park, spun out of the University of Amsterdam in 2022, illustrates the model: Fully-equipped, shared laboratories available by desk rental or day pass, with lab management, waste disposal and procurement support included, so early-stage companies avoid heavy upfront investment.

Beyond their own campuses, universities hold credibility they can spend on advocacy. Informing funding priorities, regulatory approaches and talent strategies helps create the conditions deep tech ventures need, and pushing for regulatory harmonisation in fields such as AI, biotech and quantum computing is how the single market becomes real for emerging technology. Talent mobility belongs in the same category: Enabling researchers to move across sectors, borders and disciplines may mean letting some star researchers go, but the long-term gains outweigh the short-term loss.

What success looks like

IQM shows what the model produces when it works. The Finnish quantum computing company emerged from the laboratories of Aalto University and the VTT Technical Research Centre, supported early on by Horizon Europe and other EU instruments. It now operates in more than nine locations across five countries with over 300 employees, has secured more than 200 million euros to become the second-best-funded quantum hardware company in Europe, reported revenue of 16.9 million euros in 2023, and carries a valuation above 530 million euros.

Italy’s Knowledge Share initiative demonstrates the same principle at ecosystem level. A joint effort between NETVAL, the Italian Patent and Trademark Office and the Politecnico di Torino, it runs a national digital platform consolidating patentable technologies and spin-out opportunities from Italian universities and public research institutions, presenting technology readiness levels, funding stages and commercial applications in a form businesses and investors can actually use.

Turning potential into progress

Europe’s deep tech ambitions will not be realised through talent and research excellence alone. The path forward requires universities to make a deliberate leap from passive actors to central orchestrators of innovation, which means challenging legacy models, aligning incentives with long-term impact, and accepting a role that extends well beyond knowledge generation. The Draghi Report on EU competitiveness makes the timing plain: Modernising Europe’s economic engine with innovation at its core is a question of sovereignty and resilience, not merely technology. The foundations are already in place, but without urgent systemic action Europe risks watching its scientific breakthroughs fuel industries elsewhere. Download Why most deep tech never reaches the market from UIIN for the full analysis and all ten recommendations for universities.

Frequently asked questions

What is deep tech?

Deep tech is technology rooted in scientific breakthroughs and engineering innovation, spanning sectors such as quantum computing, synthetic biology, space technologies and new energy solutions. It differs from conventional technology in requiring far longer development cycles and much heavier capital investment before reaching market readiness.

Why does deep tech struggle to reach the market?

Development timelines running to years or decades make investors cautious, so while early-stage funding is available through seed funds and EU grants, later-stage capital is scarce. Regulatory fragmentation across EU member states limits scaling, and university spin-out terms can deter the very investors a venture needs.

How much equity should a university take in a spin-out?

Emerging practice points to caps of around 5 to 10 per cent, levels that keep ventures attractive to external investors. Milestone-based vesting and hybrid models combining modest equity with royalties or revenue-sharing align institutional benefit with long-term venture success, rather than extracting value at the most fragile stage.

What does a Technology Transfer Office do?

Traditionally TTOs manage patents, licensing agreements and intellectual property portfolios. The more valuable role is ecosystem building: Acting as matchmakers who connect researchers with funders, mentors, industry partners and markets, while helping founding teams navigate their own institution’s internal processes.

How can universities support deep tech start-ups?

By reforming equity and licensing terms, opening laboratories and equipment to spin-outs early, building entrepreneurial skills among researchers, connecting teams to public funding programmes such as the EIT HEI Initiative and EIC Accelerator, and using institutional credibility to advocate for regulatory harmonisation across Europe.

Ready for more?

Deep tech has commanded the attention and imagination of researchers and policymakers alike, with their entrepreneurs celebrated as leaders of the next frontier of innovation. But what makes a great deep-tech entrepreneur? Our brief, How can you become a deep tech entrepreneur?, we delve into how successful commercialisation of innovations demands a diverse set of skills. Drawing on extensive research, we explore the three essential skill areas for deep tech ventures to be successful and offer key recommendations for university incubators for startups to reach market maturity.

Jose Villagrán Polo (author) is the Deputy Manager R&D Projects at UIIN.
Arno Meerman (author) is the Founder and CEO of UIIN.