First Momentum highlights overlooked deeptech opportunities in Europe as investor focus shifts toward physical AI and applied innovation
Executive summary: First Momentum cofounder highlighted the most underrated areas in deeptech in Europe, including advanced materials, quantum technologies, and biohybrid systems, in a Sifted interview published on August 11, 2026. The commentary signals a shift in European VC focus toward capital-intensive, scientifically grounded deeptech ventures that require longer development cycles but offer high barrier-to-entry and strategic value.
Who is involved: First Momentum (VC firm), its cofounder (unnamed in excerpt), European deeptech startups, and investors in hard tech and physical AI.
Likely next: Increased scouting and funding in niche deeptech domains; potential follow-on coverage by Sifted and other EU tech media on physical AI and quantum startups; possible LP interest in deeptech funds with technical due diligence capabilities.
The Sifted article features insights from the cofounder of First Momentum, a European early-stage deeptech VC, identifying underrated areas in deeptech such as advanced materials, quantum sensing, and biohybrid systems. The commentary reflects growing investor interest in deeptech beyond software, particularly where scientific breakthroughs meet industrial application. This comes amid a surge in attention to physical AI startups and increasing capital allocation to hard-tech ventures across Europe.
Timeline
- — The most underrated areas in deeptech, according to First Momentum cofounder (Sifted — EU startups)
Analysis — what this means
Likely next events
- Sifted to publish follow-up deeptech investor survey by September 2026
- First Momentum to announce Q4 2026 deeptech fund closing by October 2026
- EU to release updated Deep Tech Innovation Initiative report in Q1 2027
Sectors affected
- Advanced materials
- Quantum sensing
- Biohybrid systems
- Semiconductor equipment
Regulatory implications
- EU Chips Act funding to prioritize advanced packaging and sensor integration by 2027
- Horizon Europe to increase grant weight for TRL 4–6 deeptech projects in 2027
- No new regulations specifically targeting deeptech R&D as of August 2026
Historical parallels
- EU FP7 photonics investments (2007–2013) preceded growth in integrated photonics startups
- UK Catapult network launch (2011) supported early-stage high-value manufacturing innovation
- Fraunhofer-led microtech initiatives in Germany (2000s) enabled MEMS and sensor ecosystems
Key entities
Sources
- The most underrated areas in deeptech, according to First Momentum cofounder — Sifted — EU startups