Not a day goes by without some confirmation that deep tech is on the rise in Europe — and public and private equity investors are here for it.
last case, OTB Ventureswhich closed a $185 million deep-tech fund in Europe that it will mostly develop to the Series A stage. However, up to 10% could go to seed funding and more than 50% to follow-on investments.
OTB’s early growth fund — the second and largest to date — is again supported by the European Investment Fund (EIF), supported by the European Union under the InvestEU Fund. The venture capital firm welcomes this support, as well as EIF’s evolving investment thesis, OTB co-founder and managing partner Adam Niewiński told TechCrunch.
“We’re seeing the EIF focus more and more on real innovative technologies — we can call it deep tech, we can call it real tech, but basically we’re talking about real disruptive technologies coming out of Europe that can compete globally or not compete only globally, but they lead global technological innovation.”
Another proponent of deep technology has made its entry into the OTB cap table: the NATO Innovation Fund (NIF), which is starting to use the €1 billion it will invest in capital and startups from its supporting members.
“Our first flagship fund of $1 billion invests at the intersection of deep technology, defense, security and resilience, with topics such as energy, quantum computing, autonomy, climate, industrials, space and biotech. OTB fully aligns with our mission,” NIF CEO Andrea Traversone said in a statement.
OTB’s approach to deep tech focuses on four industries that sound pretty compatible with NATO: space technology, business automation and AI, cyber security and fintech infrastructure. That’s where fintech would be a bit more technically innovative. this could be AI-enabled anti-money laundering like Fund 1’s holding company Silent Eightfor example.
Since OTB already started making investments from this fund after that first close in November 2022, we already have a sense of where it will go. For example, its nine investments so far involve German startups KYP.ia productivity platform, and Semron, which develops innovative chips.
On the contentious issue of dual-use technology, OTB co-founder and managing partner Marcin Hejka was keen to dispel misconceptions. From space and IoT AI to 3D printing, “it is only natural that the defense sector will increasingly implement technologies with civilian roots. It should not be confused with investing in weapons, it is not that at all.”
We wish we had asked NIF the same question, but we’ll have to wait, as he declined to be interviewed for this article.
This means that we cannot confirm whether the funding that went to OTB could also have gone to, say, a French or Austrian tech fund. Like NIF, OTB is headquartered in Amsterdam and its other office is in Warsaw, where NIF also plans to have a regional office. Perhaps most importantly, both the Netherlands and Poland contribute to the NIF.
According to NIF rules, it will “only make direct investments in start-ups located in any of the 23 participating Allied nations” — a list of backers that does not fully overlap with NATO or EU members, and notably does not include France. However, the geographical scope of the NIF is less clear in terms of indirect investments, as it only refers to “deep technology funds with a transatlantic impact”.
Either way, OTB’s roots have benefits. The company boasts “an unfair advantage in terms of access to trade flow in Central and Eastern Europe,” and that plays into the capitalization table as well. Her new fund is backed by CEE entrepreneurs, not just those she’s backed in the past: Her LPs include Snowflake co-founder Marcin Zukowski, who was already far along in his journey when OTB was founded in 2017 .
OTB may have lost Snowflake backing, but it has other success stories with Fund 1, including Cisco’s acquisition of BabbleLabs in 2020 and the sale of Minit to Microsoft in March 2022.
It will likely take a few more years for Fund II to drive M&A, but Niewiński has higher hopes. “Our new fund enables us to advance our mission to support disruptive deep-tech startups that tap into Europe’s extraordinary pool of tech talent — the greatest natural resource our continent has to offer.”
