Would Deep Tech be the answer?

How can we remain competitive and respond to today’s challenges by relying only on innovation? What comes before and after innovation?

In the last few years, a new term has been coined and is now used by venture capitalists worldwide to refer to a new category of start-ups: deep tech. While many think that the term refers to companies operating in the field of artificial intelligence or robotics, it actually encompasses a much broader set of ventures.

The wave of deep tech ventures started a few years ago, when multiple factors converged in order to enable the emergence of this new breed of companies. These include:

• The convergence of approach: engineers are collaborating more with designers and scientists. This is leading to a clear shift from efficiency-driven products towards products that deliver meaning through emotional connections (design) while solving complex problems (science).
• The convergence of technologies: Matter and Energy, Sensing and Motion, Computation and Cognition are all coming together to deliver highly differentiated solutions for previously unsolvable problems. This is leading to a higher level of complexity with regards to the problem statement itself, as well

Indeed, the next industrial revolution is being led by entrepreneurs who are using technology to solve fundamental problems and unmet needs across all industries applied to many important and diverse fields.

They are combining deep technology with deep talent to invent new products and services that will reshape our lives. Yet, to build a successful deep tech company, you need to go through a long process that involves research and development, prototyping and testing, iteration with end users, and finally commercialization.

This process is called DBTL — design, build, test learn — and each stage can take months or even years.

Moreover, Deep Tech usually have some or all of the following characteristics:

1. Novelty — Deep tech relies on new ways of doing things, so it can be hard to understand for non-experts. There can be a long gap between initial discovery and its application to solve a problem in the real world. This can require patience and commitment from investors, who need to understand how to support research and development until it’s ready for market adoption. Deep tech is defined by the use of advanced technologies and significant R&D to solve big problems. Novelty is often found in the combination of disparate fields, as in the case of bioinformatics (biology + computer science) or nanomedicine (nanotechnology + medicine). Another way to think about it is that deep tech finds new ways to apply an existing technology in a novel way.
2. High impact — The problems that deep tech seeks to solve have a direct impact on society and the economy, including climate change and hunger, health, energy access and more. Indeed, deep tech is often aligned with one or more SDG topics (the United Nations’ 17 Sustainable Development Goals (SDGs)). However, it’s important not to underestimate the time needed for commercialization and market adoption. For example, we’ve seen promising medical technologies take more than 10 years to reach.
3. Time to scale. It takes years for basic science research to move from concept to applied technology — think about how long it took for the Internet to emerge from early R&D at universities and government research labs. The time between ideation and commercialization means that deep tech companies require a longer investment runway than other startups.

Recent mapping of the global state of the art on deep tech shows the interest of more than 1600 venture capital (VC) and corporate venture capital (CVC). Atomico data Invest reported approximately $20 billion investment reached in the first nine months of 2021, from VC/CVC as well as from more than 500 accelerators on 15 verticals, as shown in the chart 1

Chart 1. Number of accelerators by verticals.

Interest in deep tech has also fueled new interest groups such as NATO. The new DIANA Accelerator program aims to foster collaboration, Open Innovation, with startups on deep tech. DIANA has been strengthened in recent years to harness transatlantic security & defense involving many Allied countries by hosting various resources such as regional offices, test centers and accelerators.

Although there is a Strategic Compass Plan recently approved as an ambitious action plan to strengthen EU security and defense policies by 2030, consistent with the NATO 2030 plan and recent challenges such as the Russian invasion of Ukraine. There is room for civilian engagement in the areas of defense, deterrence and security that is not related to military action.

All these challenges and instabilities lived within the pandemics, the shortage of raw materials, logistics and energy, the geopolitical fluid scenarios and climate change.

Besides, social engagement on debates on ethics and deep tech, on IA or robotics for example, had provided a new vision on the Role of Deep Tech to shape societies, local governments, civilians and the private sector.

These movements & challenges are the best allies to create more resilient societies, not only to preserve autonomy in certain strategic technologies, goods and resources, but also to strengthen our democracy and human rights.

The open question is: ¿how far are local governments, civilians and private efforts on deep tech, from this open scenario?