The phrase Deep Tech is being used more, but while there is some general notion of it being “cool tech” like Artificial intelligence or autonomous cars, the Deep Tech industry is doing far more than space age tech. In Europe, Deep Tech companies have a combined value of 700 million Euros today. And with predictions of a handful of Deep Tech solutions predicted to add $13 trillion to the global economy over the next decade, it is time to stop seeing Deep Tech as movie magic and understand what it is and why it is so important.
What is Deep Tech?
The phrase Deep Tech is sometimes considered a bit vague and can be forgiven for thinking it focuses on cool tech for the sake of it. Two things need to be fulfilled for a business or idea to be considered Deep Tech.
Air Street Capital describes two key elements that must be present for a start-up to be considered “Deep Tech”. Firstly, there must be a science or engineering risk to get the idea to work, and there must be a risk in proving marketing demand for the product. Both must be present for a company to be considered Deep Tech.
What is the difference between Start-up, Biotech & Deep Tech?
Unlike Deep Tech or biotech, a regular start-up may exploit new technologies. They will mitigate risk by validating the market fit as soon as possible with much shorter research and development phases, often using proven business models or technologies. Regular start-ups will rarely have patent ownership as part of their business.
Deep Tech and biotech share a longer cash burn. Deep Tech has an extended R&D phase, often involving a more significant number of technical staff and regularly involves hardware and IP. There is also a higher risk of proving market demand. The difference with biotech is the discovery phase is becoming shorter, and some of the risks are mitigated as there is generally a market for curing disease, even though funding for such developments has been notoriously difficult.
Who is backing Deep Tech?
Deep Tech start-ups have considerable backing from different areas. Many arise from universities and, as such, have academic support, which helps the university to attract funding as well as the university being able to support real change in the world from their alums.
Twelve billion euros a year are being put into funding programmes which are accessible to Deep Tech start-ups. Innovation funds across Europe are turning to Deep Tech to help solve global issues like climate change, food, and healthcare access.
An estimated 150 billion euros a year of corporate spending has been used for R&D in Deep Tech. They are looking to Deep Tech to help with business growth and to secure their future within the landscape.
Around a quarter of all European venture capital investments have been within Deep Tech (10 billion euros a year). VC businesses are looking to back early-stage tech to capture new markets and progress the ecosystem.
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