The landscape of the tech industry has changed dramatically over the last few years. From an industry where only a few companies exited before 2015, by 2020, the number of start-ups grew from 1850 to 6600. Since then, Deep Tech's investment has been increasing by 50% yearly.
The growth within Europe has been tremendous. With businesses speaking with pride about the European routes and looking to be success stories for their area and European investors, there are new challenges for European deep tech businesses.
Deep Tech companies in Europe are now ready to scale; however, unlike other tech businesses and disciplines, this is one of the more difficult things to do in Deep Tech.
Here we look at three key challenges facing Deep Tech companies trying to scale in Europe.
SHARING THEIR NARATIVE
Deep Tech, within its nature, is often made up of founding members who often come from scientific backgrounds. Science first founders can result in a start-up business being obsessed with the tech and focused entirely on getting the tech 101% ready.
However, this often leads to more complex explanations of the business. Having an unclear narrative and expecting investors to understand the science in depth can hurt the business's growth opportunities and gain more funding.
Creating a compelling narrative and having the marketing explain the tech as if talking to the public domain could make a huge difference. Communicating the value through the story would not just help a business grow but could help innovators and the industry accelerate overall.
While the investment into European deep tech has grown significantly, it is still a relatively small pool to pull from compared to companies in the US. An issue that keeps being brought up by European deep tech businesses is that investors are looking for others to make a move first. There have even been reports that funding hasn't been given initially because of the concern that additional funding will not be obtained further down the line.
Government funding and matched funding options help generate the capital; however, this still results in a lack of leadership overall. Comparatively, the US have several prominent venture capital funds which regularly take the lead position and China's government funds and private capital also act as leads.
The funding rounds being smaller in Europe often leads to a lower business valuation. The knock-on effect means that it becomes more difficult to attract additional investors and often can deter bringing in the talent needed to help businesses scale-up
DEEP TECH TALENT
It is well known that the tech industry is crying out for the talent it needs. Deep tech is no different. Scaling up requires more talent within the business, both with technical skills and business management skills.
Only recently, the European Commission recognised that more people need to be trained in Deep Tech disciplines. As a result, the European Commission has committed to training one million people across Europe in the next three years.
Deep tech companies often narrow their needs by wanting to find talented business and sales staff with related technological backgrounds. Finding talent is a challenge for any tech business at the moment, but deep tech start-ups are often just taking their first steps out of the lab. The skills, knowledge and ability being looked for of talent are very hard to find, and often they are already in the positions and companies they want to work in, so making a case to convince someone to move can take time and effort. Working with a dedicated talent partner can help Deep Tech businesses create compelling offers for the top talent they need to bring in to help their business grow and know where the right people are and how to approach them.
Approaching and finding new talent will continue to be a considerable challenge for Deep Tech companies. A talent roadmap as part of a business's growth is essential to ensure that talent does not become the roadblock to success.