Diving in to Deep Tech

Many of the world’s most pressing problems — from addressing climate change to developing sustainable food and water systems and improving human health and wellbeing — depend critically on the successful commercialisation of fundamental science and engineering innovations that are often referred to collectively as “Deep Tech”.

“One of the major problems faced by Deep Tech companies like ours is the amount of time it can take to transition from prototype to commercial product, especially when entering a market that doesn’t exist yet. The wind energy industry shares our vision for the future, but we also need key players to be part of a collaborative effort and be on the journey with us so we can make sure the end product is validated and fulfils their needs.”

Chris Cieslak,

CEO of BladeBUG who are developing advanced robots for the inspection and repair of wind turbine blades.

Unlike software or digital innovations, Deep Tech innovations require years of developing, testing, iterating, perfecting and sometimes pivoting to bring to market. They provide solutions to some of the world’s most pressing problems which means that, if successful, the payback and societal impact could be huge. But, due to their pioneering nature, they also embody inevitable risk in both the tech and its market which requires committed and patient investment. Not easy to come by in today’s fast-paced and resultsdriven society. As a STEM university, Imperial has Deep Tech very much at the heart of its entrepreneurial ecosystem. By enabling access to facilities and support through initiatives such as those hosted by the Imperial Enterprise Lab, Imperial White City Incubator and Imperial College Advanced Hackspace (ICAH), there has been an increasing number of Deep Tech startups founded by students as well as academics. According to Oscar Ces, Head of Department of Chemistry and Co-director of the ICAH, the increase in student Deep Tech startups is a relatively recent shift. “If you go back 15 or 20 years most student startups were fintech or digi-led,” he says. “Because we just didn’t have the infrastructure to facilitate Deep Tech ventures for students. But now there’s almost no barrier to a student spinning out a company in life sciences, material sciences or biotech and as a result we’ve seen an explosion in Deep Tech startups.”

With the expanding number of Deep Tech startups there has been a growing realisation that these companies need tailored support to get them to the point where investors are ready to commit the right amount of capital for the right amount of time. The runway along which these ventures develop is lengthy – ten to fifteen years minimum– and this requires investors who understand the nature of Deep Tech and, above all, are able to wait until these endeavours to come to fruition.

Deep Tech requires a different approach to entrepreneurship that incorporates the complexities of scaling up this kind of venture from a laboratory prototype to feasible product. Current approaches such as the Lean Startup Model work to a relatively linear and simple

process, moving from idea to minimal viable product to testing and iteration. “The Lean Startup Model is an accepted approach around the world,” says Dr Simon Hepworth, Director of Enterprise at Imperial College London. “But it’s mainly aimed at software companies and isn’t so appropriate for Deep Tech ventures that have a longer and more complex runway ahead of them.”

To overcome these challenges Imperial has started an Institute for Deep Tech entrepreneurship which is headed up by Professor Ramana Nanda who is an expert in the financing frictions faced by new ventures.

Whilst acknowledging that every Deep Tech startup is unique, Professor Nanda plans to extract generic learnings and insight into the moments in a venture’s journey where support is particularly necessary. At the heart of this is the proposal for a new funding model that harnesses philanthropic capital as a means to ensure more patient, committed and trusting investment. “Currently we don’t have a financing model that will allow us to take technologies out of university labs and bring them out to the point where investors are willing to finance,” he explains. “A common refrain you hear Venture Capitalists say about a Deep Tech venture is ‘it’s a great idea but it’s not a business, it’s a research project’. As such some great innovations don’t get funded because they are not mature enough to be viable businesses but too applied to be called research projects.”

The hope is that a new funding approach can help bridge the valley of death, and alongside this a new teaching model can develop entrepreneurship skills to enable founders to overcome challenges. Again this will involve distilling elements that are common to Deep Tech ventures, whilst still recognising that each has its own very distinct journey which, in some respect, also relies on timing and luck. “We want a teaching approach that is abstract enough that it can cover a wide range of ideas,” says Professor Nanda. “But also specific enough so that it maps onto the ways in which venture capital investors and other investors are actually thinking about the problems.”

With the ongoing challenges of the current pandemic and the unrelenting requirements to meet targets around zero carbon and sustainability it’s clear that Deep Tech innovation has an important role to play now and in the future.

Find out more about the Institute for Deep Tech Entrepreneurship here:

“Since the essence of Deep Tech is to challenge the norm, and even the accepted fundamentals of our scientific understanding, the issues surrounding its development multiply from its inception. These begin with the difficulty of funding the scale-up and prototyping. They continue through adding complex operations early on into the company life cycle. Running concurrently, and partly as a result of the challenging business model, is the need to bridge ‘the valley of death’. Which, more often than not, necessitates government funding of some kind to secure the company’s survival.”

Krisztina Kovacs-

Schreiner, CEO of Lixea who are developing a novel chemical fractionation process for woody biomass or agricultural residue to enable its conversion into biofuels and bioplastics.

Top tips for Deep Tech startups from people who have been there and done it

• Be determined – this is a long journey with many twists and turns.

• Talk to industry and potential customers early on – get some early validation of what you are doing is wanted and needed

• Surround yourself with remarkable and determined people with expertise in tech, management and commercialisation, you cannot do it all on your own. • Walk carefully between staying in stealth and becoming public – if you disclose the detail of your venture on a public platform you may jeopardise your patent. • Take advice from mentors and advisors on the valuation of your venture - look at your competitors and see how they were valued at similar stage of the journey.

Support for Deep Tech entrepreneurs

Commercialisation Support

Commercialisation Support

– developing a non-dilutive funding model that is tailored to the commercialisation challenges faced by Deep Tech ventures

Ecosystem and Policy Support

– establishing a systems-level view to address ecosystem and policy challenges

Research Platform

– creating a research platform to inform evidence-based best practices specific to Deep Tech.

Ecosystem and Policy Support Research Platform

“Through the Institute for Deep Tech entrepreneurship we want to develop a systematic understanding of the journey taken by these Deep Tech ventures from idea through to commercial finance to understand what are the key places where some startups fail and others have huge successes. We want to try to identify and anticipate those systematic bottlenecks that the companies are hitting and to refine our support in this virtual cycle of research, teaching and commercialisation support.” Professor Ramana Nanda, Lead for Institute in Deep Tech Entrepreneurship