Europe’s commercialisation gap risks losing spin-offs to US investors

Europe’s strength arguably has been, and still is, innovation. However, there are other contenders on the block, and their ability to commercialise that research is attracting European-bred talent to different shores. Europe spent €403 billion on research and development in 2024. It employed 2.21 million full-time-equivalent researchers, 47% more than a decade earlier. These are the foundations of a serious innovation economy. Yet spending on R&D still accounts for 2.24% of EU GDP, below the levels recorded in the United States, Japan and South Korea.  Once the research leaves the laboratory, the problem becomes even more pronounced. DeepTech attracted 44% of European venture capital in 2023, but only 23% of EU university spin-offs operate in the sector. In the United States, more than 60% of VC-backed DeepTech companies are spin-offs. This goes on to show how Europe produces the science and trains the researchers, but fails to convert that base into companies with the capital and market access to scale. Funded twice, lost in between European research receives substantial public support. Startups can also raise from an established early-stage investment market. But when a research team must negotiate intellectual property, or prove that its technology works outside the lab and build a company before revenue is realistic, that’s when the chink in the armour shows. Europe provides 86% of the early-stage capital raised by its DeepTech and life-science spin-offs. Once those companies reach the late stage, nearly half of their funding comes from outside the continent, mainly from the US. Since 2019, American companies and investors have captured close to €20 billion in value from European spin-offs. And this is happening while the pipeline grows. European research institutions produced around 100 DeepTech and life-science spin-offs a year between 2000 and 2010. Since 2015, the figure has exceeded 500 annually. More than 7,300 such companies now employ over 167,000 people and carry a combined valuation of €344 billion.  A good case to illustrate this with is Oxford Ionics. Physicists Chris Ballance and Tom Harty founded the company in 2019 to commercialise trapped-ion quantum-computing research. By 2025, the team had grown to more than 80 people and raised over €35 million (£30 million). In September that year, US-listed IonQ completed its acquisition for €931 million ($1.075 billion). Oxford retained an important research operation, and the founders stayed with the company, but its ownership moved to an American parent. While being a strong exit for the founders and early investors, it was simultaneously the largest acquisition of an Oxford quantum-computing spin-off.  The deal captures the tension at the centre of Europe’s commercialisation debate where success for one company can still mean strategic technology and future value being absorbed elsewhere. Research spin-offs start further from the market A software founder can often test a product with customers within months, whereas a university spin-off may spend years validating a material, running clinical studies or building specialised hardware. Before it can sell anything, the team may also need to negotiate a university licence, recruit commercial leadership and raise money for equipment. Europe’s funding architecture does not always account for that starting point. The EIC Accelerator has a €634 million budget for 2026 and can provide grants below €2.5 million alongside equity investment. Its funding covers technologies at Technology Readiness Levels 6 to 8. A researcher working with a laboratory prototype at TRL 3 or 4 is still several steps away from eligibility. There are programmes aimed at earlier stages. The €100 million EIC Transition scheme supports the conversion of results from selected EU-funded projects into innovation opportunities, but eligibility is tied to specific research programmes. The new Advanced Innovation Challenges pilot has only €6 million for 2026, with initial grants of up to €300,000. The stated focus is fields where Europe has extensive research but little commercial uptake, signalling that the EU has recognised the gap.  Building around the scientific founder A small group of investors is starting earlier. Denmark-based PSV Hafnium closed an oversubscribed €60 million debut fund for Nordic DeepTech. University2Ventures is targeting the same amount for spin-offs from European technical universities. PSV Hafnium has already backed SisuSemi, a Finnish semiconductor startup built on a decade of research at the University of Turku.  These funds are designed around the realities of research-led companies. They can invest before revenue, help assemble commercial teams and work through technical validation with founders. Yet two €60 million funds remain small beside the €20 billion ($24 billion) in spin-off value captured by US investors and acquirers since 2019. It isn’t entirely a money problem either. Scientific founders need clear university equity terms, experienced operators and first customers willing to test unproven technology. A research comparison of European and US technology-transfer offices found that European offices did not complete fewer licences after researchers controlled for institutional differences. They did, however, earn significantly less licensing income. The gap was linked partly to the industry experience available inside the transfer offices.  Commercialisation is now an industrial question In 2025, 76 European DeepTech and life-science spin-offs had reached either a €867 million ($1 billion) valuation or €86.65 million ($100 million) in annual revenue (including companies like ICEYE, IQM, Isar Aerospace, Synthesia and Tekever). Spin-offs raised an estimated €8 billion during the year even as overall European venture funding remained well below its 2021 peak. These companies work in quantum computing, space, BioTech, robotics and AI. Areas that will shape industrial capacity and startup returns. Going forth, Europe needs to reckon with a couple of questions. Can a researcher with a promising laboratory result secure the intellectual property, validation funding, commercial expertise and first pilot needed to form a viable company within a year? Today, the answer depends heavily on the university, region and programme involved. Europe has already financed much of the discovery. That has been its armour. Closing the commercialisation chink means supporting the difficult years that follow, and keeping enough capital and market access on the continent when those companies begin to scale. The post The chink in Europe’s innovation armour appeared first on EU-Startups.