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The general mood around the European startup ecosystem seems to be on the up — at least according to some people attending Sifted’s Summit in London last week. But some deeptech startups are currently dealing with a few big challenges, founders and investors explained onstage during Day Two.
The sector (which includes everything from robotics and defence tech to AI) has certainly caught the attention — and euros — of more VCs in recent years. But startups are facing something VC funding alone can’t fix: a talent shortage.
“Where there’s more scarcity and more of a war, if you like, is definitely deep learning,” Margarida Garcia, VP of operations at Europe-and-US- based AI startup Poolside, said onstage on Thursday. “There’s just less people with the amount of experience that you need for the problems that we’re trying to tackle.”
She adds that Poolside has been lucky in hiring people, but that they’ve interviewed around 1,000 people in the last 15 to 16 months to find the right fits.
Engineering talent is in high demand at the moment, but there’s an even more acute shortage in Europe of people who’ve had experience scaling deeptech companies, some say. Trying to find people that have helped scale up companies and want to do that again isn’t always easy, David Parry-Jones, chief revenue officer at German AI language startup DeepL, said.
“The talent is there but a lot of it has grown up with American tech, not European tech,” he argued, adding that DeepL’s more conservative, German approach to engineering isn’t quite the same mentality as you find in the US.
One way some startups are trying to ease the talent crunch is by thinking about location: for both engineering and commercial talent.
Bogdan Ponomar, cofounder of AI/ML tech community Roosh Circle, suggested that startups should embrace hybrid and remote work and look at lesser known talent hubs.
“If you’re trying to hire talent in competitive environments where cost of living is very high, that is very challenging,” he said.
But it’s not just talent that’s tricky for deeptechs: defence tech startups — which have become less controversial for investors since Russia’s full-scale invasion of Ukraine — are struggling with even more mundane issues, like getting a bank account.
It’s trickier to open a bank account as a defence startup, said Karl Eze, founder of unmanned aerial systems consultancy and services provider Point Zenith, because of the compliance systems that banks go through. Companies working in technologies that could be used for defence tend to face more scrutiny from financial institutions when it comes to processes like know your customer (KYC) and anti-money laundering checks.
Despite the challenges defence and deeptech startups are facing, VCs clearly aren’t deterred: Just this week, Poolside raised a massive $500m round, while other deeptechs like German AI battlefield software startup Helsing or DeepL have both raised hundreds of millions of euros this year.
I’m curious to hear from you, deeptech founders: what challenges are you facing running your businesses right now? I’m all ears.
A version of this article first appeared in Sifted’s Daily newsletter. Want more stories like this? Sign up here.
Update, October 9, 2024: This article has been updated to clarify what Roosh Circle does.
Read the orginal article: https://sifted.eu/articles/deeptech-startup-europe-tech-struggle/
