March 31, 2021

France adds €700m to Europe’s deeptech arms race

Deeptech represents Europe's great hope for startup champions. France just upped the ante.

Chris O’Brien

5 min read

Paul-François Fournier, director of innovation at Bpifrance.

Deeptech has generated a frenzy across Europe — VCs and policymakers are betting billions of euros that new research-based technologies will shift the global balance of power in their favour, by unleashing a world-beating generation of startups.

Even as the results of these investments so far remain unclear, France has decided to double down with Bpifrance announcing that it would increase the size of its five-year Deep Tech fund from €1.3bn for €2bn, making it one of the most ambitious in Europe.

For Paul-François Fournier, head of Bpifrance Innovation, the move is a recognition of the early success of the program but also conveys the sense of urgency France feels to innovate in sectors such as health, the environment, and industry (which all fall under deeptech). 


“We need to extract this value from the research centres and to create new businesses,” Fournier said. “That's the ambition of the Deep Tech plan: to take this new wave of innovation and to connect the large research centres with the startup ecosystem.”

Europe steps up

It’s not just France that is making a big play to beef up its deeptech capabilities. 

A quick glance across the European landscape reveals just how aggressive numerous governments have become in their support for deeptech startups; amid a belief that this is one area where Europe has a real card to play in the global tech race.

Here is a short list of initiatives: 

  • On March 18, the EU formally unveiled the European Innovation Council that will have a €10bn budget “to develop and expand breakthrough innovations.” That will include €3bn for an EIC Fund that has provoked some controversy thanks to the strategy of investing directly in startups.
  • Back in December, the German government unveiled a €10bn Future Fund for the nation’s startups. A big plan, and now the government is starting to fill in some of the blanks. On March 25, the German Ministry of Finance revealed additional details, including that €1bn would be earmarked for a Deep Tech Future Fund.
  • The UK government pledged support for startups in April 2020 to help them weather the pandemic. This Future Fund eventually grew to £1.25bn, and included £750m for SMEs focused on R&D. In early March, as part of the 2021 budget, the government said it is creating the Future Fund: Breakthrough (innovative names are apparently not essential) which will dedicate £375m to “R&D intensive companies.”
  • SmartCap, a VC fund controlled by the Estonian government, has announced a Deep Tech fund. While Smartcap is putting in the first €15m, it’s hoping to raise more from private investors. 

It’s worth noting that many of these same players also have separate funding initiatives to supercharge their AI sectors as well as Quantum Computing. This deeptech money is extra gravy for science-based startups.

France, UK, and Germany in the lead

It’s not surprising to see which state governments are leading this funding. According to Dealroom, between 2015 and 2020, UK deeptech startups raised €12bn in VC. France and Germany were runners up at €5bn each.

Fournier of Bpifrance doesn’t necessarily see these EU rivals as threats to France’s plans. While he acknowledged some competition, he wants to see more cooperation at all levels to foster a sense of 'coopetition.'

We need to work together in those cases and not compete as we used to compete.

In recent weeks, he’s been talking with partners in those countries about how to coordinate investments.

“We know that the Germans are moving and we know that the UK is also working on this,” Fournier said. “Of course, it’s good to see France competing against Germany because that helps to increase your ambition and to benchmark yourself. But we need to work together in those cases and not compete as we used to compete. Even though we have already a lot of money from the state, we need more because [deeptech] is highly capital intensive.”

French Report Card

The good news for France is that two years into the nation’s Deep Tech plan, things appear to be moving faster than expected. 

Originally rolled out in 2019, the French government wanted to invest €1.3bn in deeptech startups through both direct bets as well as placing money in VC funds. The motivation was a common refrain: connect research and startups.

While digital tools and the internet have been reshaping many sectors of the economy, Fournier said areas such as health, climate, and industry needed more fundamental breakthroughs to be truly transformed.


The government created the program to put financial muscle behind this push. But it also sought to bring down other hurdles. This included a profound institutional reluctance by French researchers towards startups and entrepreneurs, who were sometimes viewed with suspicion. 

Bpifrance embarked on a deeptech tour to visit universities and research labs to address concerns, demystify the startup world, and highlight the potential benefits of working with entrepreneurs to create practical applications for such research. In addition, the bank pushed for changes in the administrative labyrinth for tech transfer to streamline the process. 

We think this next wave of innovation will be larger than the digital one we’ve already experienced.

Fournier has good reason to be pleased. For the latest update, Bpifrance identified 1.7k deeptech startups in France which accounted for about 20% of the VC raised last year. 

The 200 deeptech startups founded in 2020 represent an increase of 40% from 2018. Fournier would like to see that rate rise to 500 annually.

With the wind at its back, Bpifrance’s decision to add another €700m to its Deep Tech fund seems like an obvious move. Rather than waiting for big corporates or research organisations to lead the way in creating innovative deeptech commercial products, Fournier believes that startups are the most effective tool.

“Startups will be the main driver of this innovation in the next few years,” Fournier said. “So we need to invest a lot so they can create this value. Because we think this next wave of innovation will be larger than the digital one we’ve already experienced.”

Chris O’Brien

Chris O’Brien is a writer for Sifted. He covers French tech, and can be found on X and LinkedIn