HV Capital's General Partner Rainer Märkle argues that Europe's path to deep tech leadership runs not through chasing US foundation models, but through a century of industrial heritage now being rewired for robotics, aerospace, and real-world AI — and why the continent's breakthrough moment is closer than the headlines suggest.
A wave that was already building
Before geopolitics moved to the top of the agenda, something was already happening in Europe’s technology base. “There was a very big wave of groundbreaking technologies evolving and coming out of Europe,” says Rainer Märkle, General Partner at HV Capital, the Munich-based firm that backed Zalando, Delivery Hero, HelloFresh and Flix. “When you look at the university landscape, the industry landscape, there was a wave of innovations — technology developments already in artificial intelligence, in defense, dual use, deep tech.”
What the macro turbulence of the past few years did was accelerate the surface-level recognition of that wave. Geopolitical tensions, wars, and a growing imperative to reduce dependence on US platforms have combined to place European sovereign technology on a very high political agenda — and, crucially, on a very high commercial one too. “This added fuel to the fire, bringing those innovations to the surface,” Märkle explains. “You have an unprecedented wave of new technologies that are not just scientifically interesting, but that are really getting to product stage and that see radically fast adoption.”
When will Europe know it has made it?
It’s a question asked often, and Märkle’s answer is characteristically unsentimental: “Hopefully never — because we always should stay hungry to go after it.” But he does see a specific kind of proof point approaching fast.
“I think you will see huge companies and successes coming out now very soon.” HV Capital’s own portfolio offers a preview: Quantum Systems, a drone company, has publicly announced plans to IPO next year. For Rainer that kind of event — alongside exits from companies like Helsing on the defense side and Mistral and Aleph Alpha on AI — is when the broader narrative shifts.
“Once you see those huge successes realized in huge exits or IPOs, that is when the broader public will recognize: actually, Europe made it.” What matters to Märkle is not just scale, but intent. These are companies, he argues, that are not being built to be acquired by US peers. “They want to build global leadership out of Europe, out of Germany, from a startup really to global dominance.”
Private capital: opportunity, not charity
Europe’s deep tech ecosystem has historically leaned heavily on public funding — from the EIF to national development banks — and the question of how to reduce that dependence is a live one in the VC industry. Mackel is direct about the distinction between what public and private capital should each be doing.
“Capital is very liquid. Private capital goes after the early stages of value creation in those companies.” At the scale-up phase, he acknowledges, many capital-intensive models — in defense, aerospace, energy — do require public funding structures. And he draws a deliberate parallel with the US: “If you look into the US ecosystem, which is always celebrated for its huge and vibrant VC ecosystem, there’s a ton of public money there as well — which ignited themes around defense, the internet, the big themes. They were all fueled by public money.”
But Märkle pushes back firmly on the idea that European managers should lobby public institutions to back them. “Calling public institutions for more investment into their funds is a bit of an egoistic part of our industry. I’m not convinced of that. We should, as managers and startups, provide the strong opportunities that everybody wants to invest in — and then we can maybe choose even public money or private money.” The distinction is subtle but important: public capital as a deliberate choice rather than a structural crutch.
The sectors where Europe has a structural edge
Rainer Märkle, is candid about where Europe cannot realistically compete. “No large foundational AI company will come out of Europe, because competition is already out there. The large language models are US-based. They have much cheaper energy, much cheaper infrastructure, compute power. So there are just structural disadvantages for companies built in Europe.”
The honest acknowledgement clears space for the more interesting argument: that the categories where Europe does have a structural edge are precisely the ones that matter most right now. Robotics, aerospace, Industry 4.0 and 5.0, real-world AI — the translation of deep industrial knowledge into technology companies that can scale globally.
“How many hundreds of market leaders were built out of Germany, all across the country, in all kinds of different domains — machinery, assembly, different industrial parts? There’s a very, very deep and strong heritage in entrepreneurship and industrial scale-up knowledge. And this is now basically applied to robotics, to aerospace, to industry 4.0 and 5.0, to real-world AI.”
He also flags a more speculative but genuinely live thesis: that the dominance of large language models may not be the final word. HV Capital has invested in companies working on world models — a different computational paradigm — where innovation on the model layer could offset the infrastructure advantage enjoyed by US hyperscalers.
HV Capital’s own pivot: from consumer to deep tech
HV Capital’s history is, in miniature, the story of European venture capital’s evolution. Its biggest historic successes — Zalando, Delivery Hero, HelloFresh, Flix — are all consumer businesses. But the firm has continuously adapted its strategy, and today sits at the intersection of generalist technology investing and genuine deep tech and AI expertise.
“As a venture firm, you have to keep adapting. So we continuously renewed our strategy, renewed our talent, added new themes to our roster. And I think this drive to never miss out on a new theme coming up brought us to where we are today.”
