According to Dealroom's European Spinout Report, the number of deep tech and life sciences companies emerging from European universities has consolidated into a solid startup funnel worth $398 billion.

76 of these companies have reached $1 billion valuations, $100 million in revenue, or both, including unicorns like Iceye, IQM, Isar Aerospace, Synthesia, and Tekever.

Recent data indicates that two new funds have emerged to bring more funding to talent emerging out of European tech universities, adding breadth to a pipeline currently topped by Cambridge, Oxford, and ETH Zurich.

PSV Hafnium, a Danish fund, recently closed its inaugural fund at an oversubscribed €60 million, with a focus on Nordic deep tech. U2V (University2Ventures) is targeting the same amount for its first fund, with offices in Berlin, London, and Aachen.

These newcomers join the growing ranks of European venture firms that have university spinouts as a core part of their investment thesis, pioneered by Cambridge Innovation Capital and Oxford Science Enterprises.

While still mostly consisting of funds backed by one or several universities and institutes, this category has diversified to include independent firms that see spinouts as potential fund returners.

According to Dealroom, European university spinouts in deep tech and life sciences are on track to raise a near all-time-high $9.1 billion in the current year, contrasting with overall VC funding in Europe, which is down nearly 50% from its peak.

Large rounds closed in the current year reflect appetite for spinouts in sectors as varied as nuclear energy and dual-use drones, leveraging research from specialized labs.

Building relationships with hubs outside of Oxbridge and leading countries can also be a way for newcomers to differentiate themselves and find deals, as stated by PSV Hafnium's partners.

PSV Hafnium itself is a spinout from the Technical University of Denmark (DTU), but is also making early-stage investments in other Nordic countries, including a Finnish startup leveraging a decade of research at the University of Turku.

However, one pain point remains: growth capital, with nearly 50% of late-stage funding for European deep tech and life sciences spinouts coming from outside Europe, mainly from the U.S.

This gap is not unique to spinouts, but is impacting the entire startup ecosystem in Europe, and Europe won't be fully reaping the benefits of its investments in talent and research unless this changes more substantially.