For a long time, universities and research institutions have served as Europe’s repository for deep tech innovations. Currently, academic spinouts have formed a robust startup pipeline valued at $398 billion — and venture capital is trailing closely behind.

As per Dealroom’s European Spinout Report 2025, 76 of these deep tech and life sciences companies have achieved valuations of $1 billion, $100 million in revenue, or both. Notable unicorns such as Iceye, IQM, Isar Aerospace, Synthesia, and Tekever are now encouraging more investors to support university spinouts.

Just this month, two fresh funds have surfaced that will channel additional investments into talent emerging from European tech universities, expanding a pipeline currently led by Cambridge, Oxford, and ETH Zurich.

PSV Hafnium, based in Denmark, recently finalized its initial fund at an oversubscribed €60 million (about $71 million), concentrating on Nordic deep tech. With branches in Berlin and London, as well as Aachen, U2V (University2Ventures) is aiming for a similar sum for its inaugural fund, for which it has just achieved the first closing.

These two entrants augment the increasing number of European venture firms that consider university spinouts integral to their investment strategies. This category, pioneered by entities like Cambridge Innovation Capital and Oxford Science Enterprises, has now fully matured and diversified.

While it primarily consists of funds associated with one or more universities and institutions, it has also expanded to include independent firms that view spinouts as promising sources of returns — a perception that is justified. Oxford Ionics, acquired by U.S.-based IonQ, was among six spinouts from Switzerland, the U.K., and Germany that generated exits exceeding $1 billion for their investors in 2025.

These exits coincide with rising funding levels. As reported by Dealroom, European university spinouts in deep tech and life sciences are projected to secure an almost record-high $9.1 billion in 2025. This contrasts sharply with the overall VC funding in Europe, which has dropped nearly 50% from its 2021 zenith.

Substantial rounds finalized in 2025 also highlight interest in spinouts across diverse sectors such as nuclear energy — Proxima Fusion — and dual-use drones — Quantum Systems, which is now valued at over $3 billion. Often, these startups draw from specialized research labs, accounting for the notable variety of European locales capable of producing spinouts.

Fostering connections with hubs beyond Oxbridge and leading nations may provide newcomers with a unique edge in sourcing deals. “The Nordic’s research institutions hold extraordinary, untapped potential,” emphasized PSV Hafnium’s partners in a press release.

PSV Hafnium itself originated as a spinout from the Technical University of Denmark (DTU), but is actively investing early-stage funds in other Nordic nations. One of its nine investments thus far was directed towards SisuSemi, a Finnish startup utilizing a decade of research at the University of Turku to develop innovative surface cleaning technology for the semiconductor industry.

It’s positive news for companies like SisuSemi that increased funding is accessible to them. This additional support is complemented by grants, commercialization aid, and enhanced deal conditions, fostering an encouraging atmosphere for Europe’s spinouts. Nevertheless, a persistent challenge remains: growth capital.

As highlighted by the report’s authors, this deficiency “is not an isolated phenomenon concerning spinouts, but a challenge affecting the entire startup ecosystem in Europe.” Still, it is noteworthy that nearly 50% of late-stage financing for European deep tech and life sciences spinouts originates from outside Europe, predominantly from the U.S.

While this proportion has lessened over time, Europe will not fully capitalize on its investments in talent and research unless this dynamic shifts more significantly — a broader problem that requires resolution.