European university spinouts are rapidly becoming a significant force in the deep tech and life sciences sectors, collectively valued at $398 billion. A new report indicates that 76 of these companies have achieved substantial milestones – either exceeding $1 billion in valuation or generating $100 million in revenue. This surge in success is attracting increased venture capital investment, even as overall European VC funding declines.
The Rise of European Spinouts and Deep Tech Investment
For decades, European universities and research institutions have been a breeding ground for groundbreaking technologies. However, translating that research into viable businesses has historically been a challenge. Now, a more robust ecosystem is emerging, with academic spinouts forming a solid pipeline for startup creation. According to Dealroom’s European Spinout Report 2025, this trend is accelerating, with European spinouts in deep tech and life sciences on track to raise $9.1 billion this year.
New Funds Fueling the Growth
The growing interest in spinouts is evidenced by the emergence of new venture funds dedicated to supporting these ventures. PSV Hafnium, a Denmark-based fund, recently closed an oversubscribed €60 million inaugural fund focused on Nordic deep tech. Simultaneously, U2V (University2Ventures), with offices in Berlin, London, and Aachen, is targeting a similar amount for its first fund.
These funds join established players like Cambridge Innovation Capital and Oxford Science Enterprises, which pioneered the investment in university-born companies. The landscape is also diversifying, with independent firms recognizing the potential for strong returns from spinout investments. Oxford Ionics’ acquisition by IonQ, resulting in over $1 billion in returns for investors, exemplifies this success.
Beyond Oxbridge: Expanding the Geographic Reach
While universities like Cambridge, Oxford, and ETH Zurich have traditionally dominated the spinout landscape, the report highlights a growing number of institutions capable of producing successful startups. PSV Hafnium specifically aims to tap into the “untapped potential” of Nordic research institutions. Their investment in SisuSemi, a Finnish startup spun out of the University of Turku, demonstrates this commitment to expanding beyond established hubs.
This broadening geographic focus is a strategic move for new funds seeking to differentiate themselves and access unique deal flow. Additionally, increased commercialization support and improved deal terms are contributing to a more favorable environment for European spinouts.
Challenges Remain in Scaling Spinout Success
Despite the positive momentum, challenges remain, particularly in securing growth capital. The report notes that a gap in late-stage funding is impacting the entire European startup ecosystem, but is particularly pronounced for spinouts. Nearly 50% of late-stage funding for European deep tech and life sciences spinouts still originates from outside Europe, primarily from the United States.
While the reliance on U.S. investment has decreased over time, Europe needs to strengthen its domestic funding capacity to fully capitalize on its research and talent base. This requires addressing broader systemic issues within the European venture capital market. The success of companies like Proxima Fusion (nuclear energy) and Quantum Systems (dual-use drones), which have attracted significant investment, demonstrates the potential for high-growth opportunities within the spinout sector.
Secondary keywords like venture capital and deep tech are increasingly relevant as the ecosystem matures. The availability of seed funding is also improving, but bridging the gap to Series B and beyond remains a critical hurdle.
Looking ahead, the continued growth of European spinouts will depend on addressing the funding gap and fostering a more robust domestic investment ecosystem. The next 12-18 months will be crucial in determining whether Europe can retain more of the value created by its universities and research labs, or if the U.S. will continue to capture a significant share of the returns. Monitoring late-stage funding trends and the emergence of new European growth equity funds will be key indicators of progress.
