Europe is betting big on deeptech. Forget incremental improvements – we’re on the cusp of radical innovations in defense, AI, quantum computing and advanced materials. Funds such as Omnes Real Tech 2 (€112M) are paving the way. So what does this European gold rush spell for Asian startups, who are similarly hustling for their own piece of the burgeoning future? More than you might think. Competition isn’t the only game in town. As the tides of global innovation continue to shift, this is one wave that Asian startups need to be aware of and ride.

Europe's Funding Frenzy

Let's be clear: this isn't just a few isolated funding rounds. We’ve witnessed a focused drive to strengthen European deeptech in a wide range of industries. From Alliance VC’s Nordic AI focus (€40M first close) to Catalyxx’s biobutanol plant (€37M pre-approval) and Skynopy's satellite ground station network (€15M), the message is clear: Europe wants to be a deeptech powerhouse.

Why should a startup founder located in, say, Manila, care that an aquaculture facility raising salmon in Iceland has secured more investment dollars. (Laxey secured additional ISK 4 billion). That’s because the ramifications ripple throughout the whole global tech ecosystem.

Innovate or Evaporate?

Here's the harsh truth: the increased European investment translates to increased competitive pressure. For one, Asian startups can no longer get by just because they are top of the pile. Meanwhile, European companies are getting a head start with these huge funding boots. If they control strategic industries, Asian startups will find it hard to get a foothold, raise funds and scale internationally.

Think about it: if a European company, like avoltra (€2.3M pre-seed), is using AI to revolutionize energy procurement, Asian startups in the same space need to be at least as innovative, if not more so. Otherwise, they face the threat of being outcompeted, priced out and eventually, left behind. This is more than a matter of playing catch up – it’s about jumping way ahead. We’re not just talking about FOMO here — we’re talking about FOMO on a global scale.

I talked recently to the founder of one such AI-powered logistics startup from Singapore – let’s call him “David”. He described the European initiative as follows, “we were already feeling the pressure from US-based companies, but this European push is different. They're catching up fast. We’re going to have to be at least that aggressive, as much on our innovation roadmap as their schedule today. That's the reality on the ground.

Money talks. And much of that European money is now really, really speaking to elite tech talent. The harsh truth is that a European deeptech boom will likely exacerbate an Asian brain-drain. Our most talented engineers, scientists and entrepreneurs will be tempted by Europe. They want more fulfilling jobs with higher pay and access to cutting-edge technology.

  • Double down on R&D: Invest in cutting-edge research and development to stay ahead of the curve.
  • Focus on niche markets: Identify underserved markets where you can establish a strong foothold.
  • Build strategic partnerships: Collaborate with other startups and established companies to leverage their expertise and resources.

Talent Drain: The Unseen Threat

This isn't just about losing individual talent. It's about eroding the foundation of the Asian startup ecosystem. If the best and brightest no longer feel welcome there, it will make it increasingly difficult for Asian startups to innovate, grow, and compete.

It isn’t only the household names. Even smaller companies such as NineID (€3.5M), focused on contractor management platforms, draw in compelling positions for talented developers. The cumulative effect is a real threat.

The prospect of leveraging the European deeptech boom represents a tremendous opportunity for Asian venture capitalists, too. Shall we Europeans expect Asian VCs to diversify their portfolios and invest in more European deeptech startups? The answer is increasingly likely, and here's why:

Naturally, European deeptech investment brings its own challenges as well. Asian VCs should learn the European market, establish connections with European entrepreneurs, and adapt to various regulatory landscapes. The possible rewards of making this change are just too big to miss out on.

  • Invest in employee development: Provide opportunities for employees to learn new skills and advance their careers.
  • Offer competitive salaries and benefits: Make sure your compensation packages are attractive enough to retain top talent.
  • Create a positive work environment: Foster a culture of innovation, collaboration, and work-life balance.
  • Highlight the unique advantages of working in Asia: Emphasize the vibrant startup ecosystem, the lower cost of living, and the cultural richness of the region.

Asian VCs: Time to Look West?

What about the Philippines? The deeptech revolution in Europe brings both gifts and threats. On the one hand, it opens new avenues for partnerships and ideas to flow. Therefore, Filipino startups would greatly benefit by collaborating with European deeptech companies to produce innovative products and services catered to the Philippine market. Conversely, it raises the level of competitive threat facing local startups. The Philippine government and private sector need to invest in STEM education, research and development, and startup support programs to help Filipino startups compete in the global deeptech arena.

  • Access to cutting-edge technology: Investing in European deeptech allows Asian VCs to gain access to groundbreaking technologies that could be transformative for Asian industries.
  • Higher returns: European deeptech startups, fueled by abundant funding, have the potential to generate significant returns for investors.
  • Portfolio diversification: Diversifying into European markets reduces risk and expands investment opportunities.

Let's not ignore the elephant in the room: a significant portion of this European deeptech funding is focused on defense. Take Omnes Real Tech 2, which is focused, by design, on early-growth European defense startups. This leads to some troubling questions regarding the possibility for such a transformation in the global balance of power.

The Philippine Perspective

What will Asian countries do in reaction to this growing European interest in defense tech? Will they accelerate their own investing in defense-tech-savvy ventures? Will they seek to forge new alliances? The answers to these questions will decide the fate of the future of global security and stability for decades to come.

Geopolitics: A New World Order?

At the end of the day, the European deeptech funding boom should serve as a rude alarm clock for Asian startups. Today, the world is moving a lot faster. The future will belong to the most innovative, most adaptable, and most resilient companies. The time to act is now. Don't let FOMO turn into regret.

How will Asian nations respond to this increased European focus on defense tech? Will they ramp up their own investments in defense technology? Will they seek to forge new alliances? The answers to these questions will have profound implications for the future of global security and stability.

Ultimately, the European deeptech funding boom is a wake-up call for Asian startups. It's a reminder that the world is changing rapidly, and that only the most innovative, adaptable, and resilient companies will survive and thrive. The time to act is now. Don't let FOMO turn into regret.