Europe’s small deep tech companies are lagging behind companies in the US, according to a new report from the European Investment Bank (EIB) and the European Patent Office (EPO).

The study identifies the “unique obstacles” that SMEs face in developing advanced digital technologies in the EU.

According to the research, cloud computing, the internet of things, 5G networks and artificial intelligence, or Fourth Industrial Revolution (4IR) technologies, form an important part of deep tech.

The report found that while global patenting activity in 4IR technologies remains strong in Europe – accounting for around 15 per cent of international patent applications that are filed in at least two countries or with a regional patent officer – the EU bloc shows the lowest specialisation in 4IR technology innovation relative to its overall innovation capacity. The US, Japan, China and South Korea show the highest specialisation in the field.

Europe also trails behind the United States in absolute terms when it comes to the number of SMEs developing 4IR technologies.

While the US has 6517 small businesses patenting in smart, connected devices, the European Union has less than half that number, with 2634.

“New smart connected technologies will add €2.2 trillion to the EU economy by 2030,” said EIB vice president Ricardo Mourinho Félix. “European businesses are catching up with leading international counterparts, and investments in deep tech innovation are crucial to further enhance Europe’s competitiveness in advanced digital technologies.

“The EIB Group and its partners stand ready to mobilise private and public investments. We are striving to help firms developing these technologies to flourish.”

EPO president António Campinos said:“From the internet of things to cloud computing, 5G and artificial intelligence, innovations in smart connected technologies are disrupting the status quo at accelerating rates across the globe. Europe’s small but highly innovative companies working in these areas can play a decisive role in advancing its competitive position in digital technologies. Today’s study highlights the policy and business conditions needed for these companies to thrive.”

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