FUTURE New generation of technology companies offers solutions for major societal problems
The promise of deep tech The term ‘deep tech’ is increasingly being used in the context of radical innovation. It is a phrase steeped in mystery and expectation. Deep tech companies could solve major societal challenges, open up completely new markets and offer a key role for start-ups in the process. But what kind of technology is actually involved and is all the hype justified?
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he term deep tech has come a long way since 2015. Swati Charturvedi from investors’ platform Propel(x) coined the term in a LinkedIn post in July of that year, in order to describe a ‘new category of technology startups’ in an effort to raise their profile among investors. “We knew there were several under-served areas in technology overlooked by investors searching for the next ‘unicorn’, she wrote. “What investors may not realise is the potential for deep technology companies to dominate the future in many ways.”
Eighteen billion At around the same time, Arnaud de la Tour reached the same conclusion. Companies built around innovations based on breakthrough technologies – artificial intelligence, biotechnology, blockchain, drones and robotics, photonics, quantum and advanced materials – are sitting on goldmines. Since 2014, Hello Tomorrow has focused on accelerating these promising technologies from the lab to the market, in part by means of an annual competition (see box on page 10). There’s no shortage of funding.
Between 2015 and 2018, worldwide investments in deep tech rose annually by more than 20% to exceed 18 billion, according to a report written by De la Tour together with the Boston Consulting Group (BCG). Among the 8,500 deep tech companies active worldwide studied in this report, 78 are in the Netherlands. They also all receive more funding than other tech companies.
Disruptive So why are investors so enthusiastic? It all comes down to the amazing promise offered by deep tech. “Many of these technologies address big societal and environmental challenges and will likely shape the way we solve some of the most pressing global problems”, write BCG and Hello Tomorrow. They have the power ‘to create their own markets or disrupt existing industries’. The underlying intellectual property is ‘hard to reproduce or well protected’, which often gives them a ‘valuable competitive advantage’ according to the report.
Start-ups take the lead “We call it deep tech in order to distinguish it from ‘normal’ tech like Uber”, explains De la Tour. Uber primarily involves an innovative
business plan that enables users to deploy existing resources. Deep tech companies in the mobility sector would also include “autonomous vehicles, flying cars or other transformative technologies”, wrote Charturvedi. De la Tour: “it’s technology that’s not only extremely powerful in itself, but could also have a huge impact on other areas of application. Think robotics, AI and quantum computers. The real potential lies in convergence with other technologies.” Deep tech is also different in terms of the type of innovation. “It’s a new way of approaching R&D”, says De la Tour. “Fifty years ago, the big established companies together with universities were the engine that drove innovation. The second wave was made up of ICT start-ups in Silicon Valley. We’re now seeing the third wave, in which startups are taking the lead on all fronts, including deep tech.”
Flexible Investing in deep tech can be difficult for various reasons, but it has one significant advantage: the science behind the technology has already been validated. “The basics are always relatively robust. That’s a major plus point”, says Gelderblom. De la Tour agrees. “Normal start-ups begin with
