Not a day goes by without some confirmation that deep tech is on the rise in Europe — and that public and private capital investors are here for it.
Latest case in point, OTB Ventures, which closed a $185 million fund to invest in deep tech in Europe that it will mostly deploy at the Series A stage. However, up to 10% could be allocated to seed funding, and more than 50% to follow-on investments.
OTB’s early-growth fund — its second and largest to date — is once again backed by the European Investment Fund (EIF), with support from the European Union under the InvestEU Fund. The venture firm welcomes this support, as well as EIF’s evolving investment thesis, OTB co-founder and managing partner Adam Niewiński told TechCrunch.
“We see EIF focusing more and more on real innovative technologies — we can call it deep tech, we can call it real tech, but we are basically talking about real disruptive technologies coming out of Europe, and being able to compete globally, or not only compete globally but lead global tech innovation.”
Another deep tech supporter made its entry on OTB’s cap table: NATO Innovation Fund (NIF), which is starting to deploy the €1 billion it will invest in funds and in startups from its backing members.
“Our first 1 billion flagship fund invests at the intersection of deep tech, defense, security and resilience, with themes including energy, quantum computing, autonomy, climate, industrials, space and biotechnology. OTB fully aligns with our mission,” NIF managing partner Andrea Traversone said in a statement.
OTB’s take on deep tech focuses on four verticals that do sound fairly NATO-compatible: space tech, enterprise automation and AI, cybersecurity and fintech infrastructure. That would be where fintech goes a bit more technically innovative; this could be AI-enabled anti-money laundering like Fund 1’s portfolio company Silent Eight, for instance.
Since OTB already started making investments out of this fund following its first close in November 2022, we already have a sense of where it will go. For instance, its nine investments so far include German startups KYP.ai, a productivity platform, and Semron, which is developing innovative chips.
On the charged question of dual-use technology, fellow OTB co-founder and managing partner Marcin Hejka was keen to dispel misconceptions. From space and IoT AI to 3D printing, “it’s absolutely natural that the defense sector is applying more and more technologies with civilian roots. It shouldn’t be confused with investing in weapons, it’s completely not that.”
We wished we had asked that same question to NIF, but this will have to wait, as it declined to be interviewed for this article.
This means we can’t confirm either whether the funding that went to OTB could also have gone to, say, a French or Austrian deep tech fund. Like NIF, OTB is headquartered in Amsterdam, and its other office is in Warsaw, where NIF is also planning to have a regional office. Perhaps more importantly, both the Netherlands and Poland are contributors to NIF.
Per NIF’s rules, it will only “make direct investments into start-ups located in any of the 23 participating Allied nations” — a list of backers that doesn’t fully overlap with NATO or EU members, and notably doesn’t include France. However, NIF’s geographic scope is less clear when it comes to the indirect investments, since it only refers to “deep tech funds with a trans-Atlantic impact.”
Either way, OTB’s roots have benefits. The firm boasts “an unfair advantage in accessing Central and Eastern European dealflow,” and this is also playing off on its cap table. Its new fund is backed by CEE entrepreneurs, and not only ones it previously backed: its LPs include Snowflake co-founder Marcin Zukowski, who was already far along its journey when OTB was founded in 2017.
OTB may have missed out on backing Snowflake, but it has other success stories under its belt with Fund 1, including BabbleLabs’ acquisition by Cisco in 2020 and Minit’s sale to Microsoft in March 2022.
It will likely take a few more years for Fund II to lead to M&As, but Niewiński has broader hopes. “Our new fund empowers us to further our mission of supporting disruptive deep tech startups that are leveraging Europe’s outstanding tech talent pool — the biggest natural resource that our continent can offer.”
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