DeepTech Hardware Napkin
The DeepTech Hardware Napkin takes a snapshot of Europe’s growing deep tech hardware scene. It’s based on around 1,000 data points pulled from Dealroom and focuses on early-stage startups in Europe — from pre-seed to Series B, during 2022 and 2023. Here are the key takeaways:
1. Why DeepTech Hardware Matters
Despite roughly $18bn invested in Europe’s deep tech sector in 2023, founders and investors still see a shortage of capital for hardware-focused companies. This “napkin” aims to give a quick, data-backed view of how these startups are actually getting funded — and what they should aim for next.
2. Round Sizes on the Rise
Comparing 2022 and 2023, the data shows:
- Pre-Seed and Series A rounds saw the biggest jumps (74% and 62% growth), suggesting a stronger appetite for deep tech hardware investments at these stages.
- Seed round sizes stayed fairly consistent yearly, hovering around the same median amount.
- Series B also saw an uptick, indicating that investors are more willing to place bigger bets on hardware startups that have proven their early traction.
3. Founder Equity Targets
So, how much of the company should founders hold onto at different stages?
- Before Pre-Seed: over 90%
- Before Seed: over 65%
- Before Series A: over 50%
These percentages reflect fully diluted shares and assume professors or advisors aren’t considered co-founders. The main takeaway is to be strategic about dilution — keep enough equity early so you still have a strong stake by the time you reach bigger rounds.
4. Public Funding as a Building Block
Public grants and government programs play a huge role in deep tech hardware, especially in the earliest stages:
- Grants can help reduce risk for investors by supplementing equity with non-dilutive capital.
- As companies grow, private VC investment typically becomes more significant. Still, founders should keep a solid pipeline of public funding in mind because it can offer a much-needed boost without eating into ownership.
The Bottom Line
Europe’s deep tech hardware ecosystem has real momentum. With round sizes generally rising and various public and private funding options available, founders have more pathways to growth than ever before. The key is to balance your equity carefully and make sure you’re taking advantage of the public funding programs that can help power your startup to the next level.
