Deep Tech Needs to Go Deeper (Except Here)

by Mala Valroy, investor and General Partner at ThursdayVC.

**Mala Valroy** is General Partner at ThursdayVC, a pure-play physical AI fund backing extraordinary European founders with their first checks.

The debate around European deep tech competitiveness seems to have collapsed into two camps. Either Europe should accept its “museum” reputation and become a fast follower, or we just need to throw enough money at the problem to make it disappear.

There is a third, more tactical option: build where we can actually be competitive.

China has already won the unit economics battle in several critical hardware categories. That’s what two decades of industrial policy, vertically integrated supply chains and brutal domestic competition can produce.

At the same time, too many Nordic AI startups are still building thin software layers on top of American models or Chinese hardware, instead of digging deeper into the tech stack where the moat and long-term value sit.

Here are three areas where the Nordics still have a genuine opportunity to differentiate:

Physical AI and Robotics

A few days ago, Genesis AI unveiled GENE-26.5, a robotics foundation model designed to close the sim-to-reality gap for dexterous manipulation with remarkable accuracy. The robotic hand in the demo was built by Chinese manufacturer Wuji Tech. Yet there is still no Chinese full-stack offering that comes close to what Genesis demonstrated.

The opportunity is not to train AI for narrow commercial applications

For Nordic founders, the opportunity is not to train AI for narrow commercial applications. It is to close other sim-to-reality gaps across multiple verticals.

Another strategic path is modular manufacturing. Instead of relying on rigid production lines, companies can build flexible assembly systems using proprietary AI and cost-effective components. Firms capable of producing drones, robotic arms or humanoids on flexible infrastructure are competing in a very different category than highly streamlined Chinese mass production.

There is also a massive opportunity in high-mix, low-volume manufacturing, the reality for much of Europe’s SME-heavy industrial base and still one of the hardest environments for robotics deployment.

Quantum

IQM remains one of the rare Nordic exceptions positioned to compete globally in quantum hardware. But Europe has fragmented its efforts instead of building connected ecosystems.

The strongest opportunity is probably not in the race for the best general-purpose qubit. It is in vertical applications such as drug discovery, materials simulation and logistics optimization.

Financing, however, has not followed.

The Nordic industrial base already leans in this direction. Companies like Novo Nordisk, Atlas Copco and Ericsson understand the value of deep industrial applications. Financing, however, has not followed. Europe still attracts only around 5% of global private quantum investment, compared to roughly 50% in the US.

If Europe wants a real position in quantum hardware, photonics may be one of the clearest paths forward, and Nordic research is already strong in this field.

Biomanufacturing

China controls roughly 70% of global fermentation capacity, so competing on scale is unrealistic. The Nordic advantage lies elsewhere: precision fermentation for high-margin specialty products.

Advanced pharmaceuticals, rare enzymes and bio-based industrial materials have taken a hit in investor sentiment recently, partly due to FDA uncertainty and broader anti-climate rhetoric. But Nordic biofoundries offering data-sovereign, regulatory-compliant alternatives to Chinese CDMOs still have a tangible and growing market opportunity.

One Area We Should Stop Pretending

There are also areas where Europe needs to stop pretending it will catch up. Batteries are one of them.

Europe, and particularly the Nordics, are structurally behind China in battery chemistry and manufacturing scale. Solid-state batteries are unlikely to become the redemption arc many hoped for, especially as China continues setting the pace in deployment.

The Nordics do not need to win everywhere.

This is one area where Europe should move up the stack instead: battery management systems, degradation modelling, second-life qualification, recycling and critical mineral recovery.

The Nordics do not need to win everywhere. They just need to win somewhere defensible. That requires a smaller map than many policymakers want to draw, but it is also a far clearer one.

Mala Valroy also joined the Nordic Hardtech Podcast i October 2025.