This study highlights the importance of photonics and microelectronics to propel the next wave of digital innovation and keep Europe competitive. Deep tech applications such as artificial intelligence, big data, additive manufacturing, robotics, the Internet of Things (IoT), and autonomous driving will require faster, more reliable, more energy efficient and more powerful photonics and semiconductor components. However, despite the high potential of these sectors, the study shows that many high-technology companies find it difficult to raise scale-up capital to fully capture the growing demand for their products and services after the first commercial launch. This sub-optimal funding situation is often linked to the complexity and high risk of photonics and microelectronics.