DeepTech Startups and their Military Applications: The EU's Latest Moves

DeepTech startups are known for their innovative use of emerging technologies, such as artificial intelligence, robotics, and quantum computing. These companies are on the cutting edge of innovation, with their ideas often having the potential to revolutionize entire industries. In recent years, governments around the world have recognized the strategic value of these technologies and the importance of supporting startups that use them.

The European Union (EU) has been at the forefront of this movement, with its member states launching several initiatives aimed at supporting deeptech startups. Germany, for example, recently launched a €1bn fund for deeptech and climate tech growth-stage companies, while NATO is setting up a €1bn VC fund to invest in early-stage defence tech companies.

In this opinion piece, we will examine the EU’s recent initiatives to support deeptech startups, with a focus on their military applications. We will explore the potential of these technologies for military use, the ethical considerations surrounding their deployment, and the ways in which these initiatives are shaping the deeptech landscape.

Topic	Description
EU’s Commitment to DeepTech	The EU’s recent efforts to support the growth of deep tech startups, including Germany’s €1bn DeepTech & Climate Fonds, and France’s €500m investment in deep tech startups.
Military Applications of DeepTech	The military applications of deep tech, including quantum computing, artificial intelligence, robotics, and autonomous vehicles. The recent launch of a €1bn venture fund by NATO to invest in early-stage defence tech companies, and the potential impact on the defence tech industry.
Growth-Stage Funding Gap	The lack of growth-stage funding for deep tech startups in Europe, and the risks associated with these startups tapping non-European investors for funding. The importance of government support for growth-stage companies.
Ethics and Regulation	The ethical and regulatory considerations surrounding the military applications of deep tech. The need to ensure that technologies are deployed responsibly and in line with democratic values.
Talent Gap and Investment Trends	The talent gap in deep tech, particularly in the field of quantum computing. The increasing interest and investment in deep tech startups and their potential impact on various industries.

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The EU’s Deeptech and Climate Fund

Germany’s DeepTech & Climate Fonds (DTCF) is the newest big commitment to innovation from a European state. The fund will invest in deeptech sectors such as Industry 4.0, robotics, artificial intelligence, quantum computing, and process automation, as well as in companies with a technology-based business model such as digital health, new energy, smart cities, new materials, and selected biotech areas. The DTCF will support startups in Europe’s largest economy by providing growth-stage funding, an area where there has been a dearth of investment in Europe.

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The DTCF is an example of the EU’s efforts to support deeptech startups and promote technological sovereignty. The EU has recognized the strategic value of these technologies and the potential for them to shape the future of various industries. By investing in deeptech startups, the EU aims to create a self-sufficient tech ecosystem that is less dependent on non-European investors.

Nato’s Venture Fund and the Changing Perception of Defence Startups

Defence used to be a dirty word for European tech investors, but geopolitical tensions and the changing security landscape have transformed the debate. Nowadays, even institutional ESG (environmental, social, and governance) funds are sinking money into defence companies, which promise to defend democracies from hostile authoritarian regimes. VCs are also warming up to defencetech startups as they emerge as a hot new investment field.

Nato is setting up a €1bn VC fund to invest in early-stage defence tech companies, a move that is expected to spur a fresh wave of investment in the sector. Backed by 22 of the military alliance’s 30 members (but excluding the US), this innovation fund is putting together an investment team that will operate on an independent and commercial basis. The fund is expected to focus on several key technologies, including artificial intelligence, quantum communication and computing, biotechnology, new materials, and spacetech.

These initiatives are intended to sharpen Nato’s military power by adopting the latest technologies used in the civilian economy. The goal is to adapt commercial technologies quickly to use in military situations, as commercial technologies can be highly effective in military operations.

The Growth of Quantum Computing

Quantum computing is a key area of interest for both Quantum computing, which van Weel mentioned as a priority for Nato, is an area that has seen strong investment activity in recent years. According to a McKinsey report based on Pitchbook data, quantum startup investments doubled from $700m in 2020 to $1.4bn in 2021. However, the report also highlighted a talent gap in the sector, with only a limited number of experienced quantum developers and researchers available.

While the military applications of these technologies are clear, there are also concerns around their potential impact on society, particularly in terms of ethics and privacy. The use of AI and biotech in military contexts raises questions about the nature of war and the role of humans in conflict. Moreover, the potential for military forces to gain enhanced physical and cognitive abilities through biotech or other enhancements is also a matter of concern.

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Another issue is the risk of tech transfer, whereby military technology developed for a particular purpose can be adapted and used for other purposes, including potentially harmful ones. This has already been seen with drones and other unmanned aerial vehicles, which were initially developed for military purposes but have now found widespread use in the commercial sector. There is a risk that technologies developed for military use could find their way into the hands of authoritarian regimes or other actors with harmful intentions.

Furthermore, the increased interest in deeptech and defencetech by governments and investors may lead to a concentration of power in the hands of a few large companies, similar to what has been seen in other sectors. This could stifle innovation and competition, as well as potentially limit access to these technologies for smaller or less well-funded players.

The Growth of Quantum Computing

Quantum computing is a key area of interest for both military and DeepTech startups. In recent years, quantum technology has emerged as a game-changer in many fields, including defense and computing.

According to a McKinsey report based on Pitchbook data, quantum startup investments doubled from $700m in 2020 to $1.4bn in 2021. This trend is expected to continue in the coming years, with many governments and private investors pouring significant resources into quantum computing and related technologies.

However, there are also concerns about the talent gap in the field of quantum computing. McKinsey’s report notes that there is a significant shortage of talent in this area, which could hinder the development and deployment of quantum technologies.

Despite this challenge, DeepTech startups and military organizations are forging ahead with their investments in quantum computing. This technology is seen as critical to developing advanced military capabilities, such as more powerful sensors, better communication networks, and more secure data storage.

However, the potential applications of quantum technology go far beyond the military. For example, quantum computing is expected to revolutionize the field of drug discovery and development, allowing researchers to simulate complex molecular interactions in a way that was previously impossible.

Similarly, quantum communication promises to make communication networks more secure, enabling safer transactions, more secure data transfer, and better protection against cyber-attacks.

In addition to quantum technology, other DeepTech areas such as AI, robotics, and process automation are also of interest to military organizations and DeepTech startups. These technologies are expected to play a critical role in developing next-generation defense systems and improving military operations.

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However, it is important to note that there are also concerns about the potential ethical implications of developing and deploying advanced military technologies. As more powerful and autonomous systems are developed, there is a risk that they could be used for unethical purposes, or that they could fall into the wrong hands.

To address these concerns, it is important for military organizations and DeepTech startups to engage in open and transparent dialogue about the potential risks and benefits of these technologies. It is also critical to have clear regulations and guidelines in place to ensure that these technologies are developed and deployed in an ethical and responsible manner.

Conclusion

DeepTech startups are at the forefront of technological innovation, with many companies developing groundbreaking technologies in areas such as quantum computing, AI, robotics, and more. These technologies have the potential to transform many industries, from healthcare and energy to finance and transportation.

However, as we have seen, there is also significant interest in these technologies from military organizations, who see them as critical to developing next-generation defense capabilities. While this presents a range of challenges, including talent gaps and ethical concerns, it also highlights the potential impact that these technologies can have.

As we move forward, it is essential that we continue to foster innovation in DeepTech startups while also ensuring that these technologies are developed and deployed in a responsible and ethical manner. By doing so, we can harness the full potential of these technologies and ensure that they benefit society as a whole.