Deep tech

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Deep technology (also deep tech or DeepTech) or hard tech is a classification of organization, or more typically startup company, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. [1] They present challenges requiring lengthy research and development, and large capital investment before successful commercialization. Their primary risk is technical risk, while market risk is often significantly lower due to the clear potential value of the solution to society. [2] The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce. [3] [4] [5] [6]

Contents

Definition

The term "deep tech" has been present for decades, [7] representing R&D divisions at major defense and telecommunications corporations such as Raytheon Technologies, Lockheed Martin's Skunk Works, and Bell Labs, to the more modern definition which increasingly includes companies found in the venture capital ecosystem or awardees of the Small Business Innovation Research (SBIR) program, a U.S. government program, coordinated by the Small Business Administration, that provides $2.5 Billion annually to small, U.S.-owned companies who compete for funding to develop and commercialize disruptive technologies. Deep tech doesn't refer to innovation itself, but to a category of startup companies that develop new products based “on scientific discovery or meaningful engineering innovation”. [8] [9]

According to year 2019 research by the Boston Consulting Group and Hello Tomorrow, a French nonprofit that supports deep technology, the most prominent deep tech fields included advanced materials, advanced manufacturing, artificial intelligence, machine learning, biotechnology, blockchain, robotics, photonics, aerospace and space technology, electronics (including semiconductor manufacturing), cyber threat intelligence, fusion power and quantum computing. Global private investment in those fields increased more than 20% a year from 2015, and reached almost $18 billion in 2018. [3] Possible fields for deep tech application include agriculture, life sciences, chemistry, aerospace and green energy. [8] In business context, deep tech has three key attributes: potential for impact, a long time to reach market-ready maturity, and substantial requirement for capital. [3]

History

The funding for deep tech companies has increased over the years. According to Boston Consulting Group, the total investments in deep tech companies increased from $1.7 billion to $7.9 billion from 2011 through 2016. [10] Investment activities are concentrated in the United States and China that totaled for about 81% of global private investments in deep tech from 2015 through 2018 with approximately $32.8 billion and $14.6 billion invested in each country, respectively. China acts as the main driver in deep tech investments with funding increasing 80% each year over that period compared to 10% each year in the US. [3] European countries are also active in deep tech investing. According to the Financial Times, in 2017 the total funding towards deep tech companies reached around €3 billion across 600 deals. [11] [8]

Corporations such as Google, Facebook, Amazon, IBM and Apple show increased interest towards deep tech applications in AI, virtual reality, drones, self-driving cars. [12] Business accelerators are also shifting focus from digital startups towards deep tech ventures. In 2016 Y Combinator's batch there were 32 deep tech startups including 9 in biotech, 4 in drones and 3 in advanced hardware. [10] The Eindhoven-based startup accelerator HighTechXL exclusively focuses on deep tech ventures.

See also

Related Research Articles

A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo-founder. During the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to become successful and influential.

<span class="mw-page-title-main">Venture capital</span> Form of private-equity financing

Venture capital (VC) is a form of private equity financing that is provided by firms or funds to startup, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth. Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the companies they support will become successful. Because startups face high uncertainty, VC investments have high rates of failure. Start-ups are usually based on an innovative technology or business model and they are usually from high technology industries, such as information technology (IT), clean technology or biotechnology.

<span class="mw-page-title-main">SoftBank Group</span> Japanese investment holding company

SoftBank Group Corp. is a Japanese multinational investment holding company headquartered in Minato, Tokyo which focuses on investment management. The group primarily invests in companies operating in technology that offer goods and services to customers in a multitude of markets and industries ranging from the internet to automation. With over $100 billion in capital at its onset, SoftBank's Vision Fund is the world's largest technology-focused venture capital fund. Fund investors included sovereign wealth funds from countries in the Middle East.

Sequoia Capital is an American venture capital firm headquartered in Menlo Park, California which specializes in seed stage, early stage, and growth stage investments in private companies across technology sectors. As of 2022, the firm had approximately US$85 billion in assets under management.

Khosla Ventures is an American venture capital firm founded by Vinod Khosla, focused on early-stage companies in the Internet, computing, mobile, financial services, agriculture, healthcare and clean technology sectors. Some of its most successful investments include Affirm, DoorDash, Square, Impossible Foods, Instacart, and OpenAI.

An angel investor is an individual who provides capital to a business or businesses, including startups, usually in exchange for convertible debt or ownership equity. Angel investors often provide support to startups at a very early stage, once or in a consecutive manner, and when most investors are not prepared to back them. In a survey of 150 founders conducted by Wilbur Labs, about 70% of entrepreneurs will face potential business failure, and nearly 66% will face this potential failure within 25 months of launching their company. A small but increasing number of angel investors invest online through equity crowdfunding or organize themselves into angel groups or angel networks to share investment capital and provide advice to their portfolio companies. The number of angel investors has greatly increased since the mid-20th century.

Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies. CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise; the objective is to gain a specific competitive advantage." Examples of CVCs include GV and Intel Capital.

<span class="mw-page-title-main">Russian Venture Company</span>

RVC (JSC) is a state fund of funds and a development institute of the Russian Federation, one of Russia's key tools in building its own national innovation system.

Andreessen Horowitz is a private American venture capital firm, founded in 2009 by Marc Andreessen and Ben Horowitz. The company is headquartered in Menlo Park, California. As of April 2023, Andreessen Horowitz ranks first on the list of venture capital firms by assets under management, with $35 billion as of March 2022.

Babak "Bobby" Yazdani is an Iranian-American entrepreneur and investor specializing in early-stage, private U.S.-based modern enterprise technology companies.

Atlas Venture is an early-stage venture capital firm that creates and invests in biotechnology startup companies in the U.S. Atlas is headquartered in Cambridge, Massachusetts, where the majority of its investments are located. Atlas raised its thirteenth fund totaling $450 million in March 2022, after raising its Opportunity Fund II totaling $300 million in September 2021.

Intel Capital is a division of Intel Corporation, set up to manage corporate venture capital, global investment, mergers and acquisitions. Intel Capital makes equity investments in a range of technology startups and companies offering hardware, software, and services targeting artificial intelligence, autonomous technology, data center and cloud, 5G, next-generation compute, semiconductor manufacturing and other technologies.

<span class="mw-page-title-main">SOSV</span> Venture capital firm

SOSV is a venture capital firm that provides pre-seed, seed, venture and growth stage funding to startups in the technology sector. The company conducts seed accelerator programs in Asia and the United States of America.

<span class="mw-page-title-main">Fintech</span> Subset of technologies used in finance

Fintech, a clipped compound of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. The use of smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of technologies designed to make financial services more accessible to the general public. Fintech companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.

<span class="mw-page-title-main">Unicorn (finance)</span> Startup company valued at over $1 billion

In business, a unicorn is a startup company valued at over US$1 billion which is privately owned and not listed on a share market. The term was first published in 2013, coined by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.

<span class="mw-page-title-main">Pitango</span> Israeli venture capital fund

Pitango VC, established in 1993, is Israel's largest venture capital fund with over $2.8 billion under management. Pitango VC invests through three dedicated funds, Pitango First, Pitango HealthTech, and Pitango Growth. Pitango invests in startups around the world, in domains such as Vertical SaaS, Digital Health, Deep Tech, FinTech & InsureTech, Devops, Generative AI, Web3, and FoodTech.

Property technology is used to refer to the application of information technology and platform economics to the real estate industry. Property technology overlaps with financial technology, including uses like online payment and booking systems. Grammatically, the portmanteau "proptech" is formed from two common nouns: "property" and "technology." As such, capitalizing it is grammatically incorrect.

Samsung Strategy and Innovation Center (SSIC) is a division of Samsung Electronics. It works with entrepreneurs and corporate partners to invest in disruptive technologies, such as artificial intelligence, digital health, mobility, the Internet of Things, and other consumer-facing applications of data-driven technology.

<span class="mw-page-title-main">Venture capital in Poland</span> Overview of venture capital in Poland

Venture capital in Poland is a segment of the private equity market that finances early-stage high-risk companies based in Poland, with the potential for fast growth. As of March 2019, there is a total of 130 active VC firms in Poland, including local offices of international VC firms, and VC firms with mainly Polish management teams. Between 2009–2019, these entities have invested locally in over 750 companies, which gives an average of around 9 companies per portfolio. The Polish venture market accounts for 3% of the entire European ecosystem of VC investments, mainly in the digital space.

The Samsung Catalyst Fund (SCF) is the evergreen venture capital fund of Samsung Electronics. The fund invests in deep technology, artificial intelligence and big data startups. The fund's headquarters are located in San Jose, California, with offices in Seoul, Tel Aviv, and Paris.

References

  1. ↑ mtc. "What is Deep Tech?". TechWorks. Retrieved 2019-01-12.
  2. ↑ "Challenges of investing into deep tech". BCG. 6 May 2021. Retrieved 2021-05-20.
  3. 1 2 3 4 Arnaud de la Tour, Massimo Portincaso, Kyle Blank, Nicolas Goeldel. "The Dawn of the Deep Tech Ecosystem" (PDF). The Boston Consulting Group. Retrieved September 13, 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  4. 1 2 "IQ Capital is raising £125M to invest in deep tech startups in the UK". TechCrunch. 27 June 2018. Retrieved 2019-01-12.
  5. ↑ BBVA (2017-11-28). "What is 'deep tech'?". NEWS BBVA. Retrieved 2019-01-12.
  6. ↑ Benjamin Bathke (May 14, 2019). "Deep Tech startups: Next wave of global disruptors?". Deutsche Welle. Retrieved September 13, 2019.
  7. ↑ Storms, Lutz, C. Gilbert, Jean A. (1998). The Practice of Technical and Scientific Communication. Ablex Publishing Corporation. p. 30. ISBN   9781567503623.{{cite book}}: CS1 maint: multiple names: authors list (link)
  8. 1 2 3 4 "What is Deep Tech and which startups are marking the road (not Uber)". Startup Business. 2018-04-20. Retrieved 2019-01-12.
  9. ↑ Raphaël Bonnet (January 28, 2019). "What's that: Deep Tech". Philonomist. Retrieved September 13, 2019.
  10. 1 2 Arnaud de la Tour, Philippe Soussan, Nicolas Harlé, Rodolphe Chevalier, Xavier Duportet. "From tech to deep tech" (PDF). The Boston Consulting Group. Retrieved September 13, 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  11. ↑ "Europe has a chance to dominate deep tech". Financial Times. 6 February 2017. Retrieved 2019-01-12.
  12. ↑ Redmond, Eric (2021). Deep Tech: Demystifying the Breakthrough Technologies That Will Revolutionize Everything. p. 18. ISBN   9781544518954.
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