What is Deep Tech?Life after consumer apps

deep tech A phrase used to describe organizations (often start-ups) that focus on technologies that require significant technical or scientific breakthroughs away from end-user products and services.phrase deep technology This sets it apart from the consumer applications that most people associate with the tech industry. So an “Uber for X” app that lets you buy anything through your phone is not deep technology, no matter how innovative and profitable it may be. New forms of material science that put faster or cheaper chips in phones are deep technologies, as are mobile broadcast innovations that provide faster or more reliable internet connectivity for mobile phones.

The phrase was coined in 2014 by Swati Chaturvedi, founder and CEO of online investment platform Propel(x).and 2015 LinkedIn Post, she describes her vision for the phrase, which distinguishes “startups in life sciences, energy, cleantech, computer science, materials and chemistry” from “unicorn” startups funded by many venture capital firms. provided a way to do so. I was chasing it in the mid-2010s. Propel(x) was founded to raise angel and venture capital for deep tech companies, so it’s a term used as part of the business side of the industry rather than a strictly technical term. But as the glow of the web and mobile startups of the last decade fades, interest in companies looking to advance their technology is growing more and more.

What is Deep Tech?

Propel(x) may have popularized the phrase, but deep tech is now taking on a life of its own in the tech and venture capital worlds. As a result, there is no central authority that can declare what is considered deep tech and what is not, and given the weight and funding potential associated with the term, there is an opportunity to stretch its meaning. Some people use Yet there is a particular set of technologies that will always dominate the top due to what are known as deep technologies.

Deep Tech Elements and Goals

What do all these technical fields have in common? There are some common elements that tie them together.

  • Solutions aimed at overcoming physical challenges: For consumer apps, much of the innovation is focused on providing a frictionless connection between customers and existing businesses and resources, ensuring some of the efficiencies that result. Deep tech startups, by contrast, face challenges at the level of physical reality rather than human organizations and networks. Whether it is the development of new drugs or room-temperature superconductors, or the creation of new computing paradigms using quantum physics, deep tech startups are active in this area.
  • Combining diverse technologies to build bigger solutions: Tesla and other electric car makers are bridging several disciplines in making cars, combining computer science and chemical engineering to produce tiny, cheap batteries that can power the cars people want to drive. need to do it. In another example, we might try to harness the power of AI to discover: new treatment for disease. These are the kinds of challenges that deep tech startups face.
  • solve the big picture problem: Hopefully by now it’s clear that deep tech startups are often trying to tackle fundamental problems facing humanity. While there’s nothing wrong with pizza delivery apps (who doesn’t like pizza?), deep tech companies are applying their lessons to problems like disease and climate change, or facilitating major advances in computing power and manufacturing processes. I’m trying to

One thing to note here is that while many of these areas are in what would be considered the “traditional” areas of the tech industry, some are beyond.As In a 2021 open letter, Chaturvedi said::

What worries us is that most people still default to thinking of deep technology only in the fields of information technology and computer science. It just so happens that people also mention innovations in life sciences and industrial technology at the same time. As a result of this narrative, VCs have become devoted to computing in general (“his AI in everything” has become synonymous these days). But other meaningful deep technologies with world-changing potential still haven’t gotten much funding interest…just a few years ago, [Tesla] Fundraising was really hard, and he was on life support with government loans and Elon Musk’s personal money. Tesla is an electric car, and at its foundation is battery technology, supported of course by a smart battery management system.But fundamentally it is chemistry. we have to defend it. We need to champion the areas of technology that help us take a step into the future.

How is it different from deep tech?

To achieve the goals just outlined, deep tech companies have different needs and business processes than customer-facing businesses. That is why this category was developed within the venture capital community in the first place. Potential investors believe Deep that his tech company needs a lot of upfront investment and a long runway before profitability and an exit event such as his IPO or acquisition can be expected. Because we need to understand. .

Specific ways deep tech companies are doing things differently include:

  • Move deliberately and handle things with care: For most of the early 21st century, tech startups followed Facebook’s mantra of “moving fast and breaking things.” That means making many small, iterative changes to products and platforms to introduce new features and push the status quo. Even if that means things go wrong sometimes during the process. (In the software world, this philosophy is expressed as: CI/CD and development.) In the process, companies may discover that what they thought was their main selling point was actually a supporting pillar, and pivot to other services and strategies. This attitude is so ingrained in tech business culture that it’s easy to forget that historically it wasn’t the norm. Moreover, it is not a viable strategy when it comes to long-term projects undertaken by deep tech companies. The innovations pursued by these companies cannot be released half-heartedly. Because we are facing higher regulatory hurdles and stricter safety requirements.
  • It’s a process, not a product: Of course, anyone with a computer can create software, and most physical products can leverage existing factories and supply chains once prototypes are developed. However, by their very nature, many deep tech products require significant investment even after the R&D stage is over. You may need to build a dedicated factory or an entirely new supply chain before you can profitably produce a salable product.
  • Connect to the broader ecosystem: Angel investors and VCs are ultimately interested in profiting from successful product launches as a result of their investments in deep technology. However, due to the length of time and risk of failure associated with this type of effort, not only commercial entities can participate in this area. Much of the deep technology innovation comes from universities and government-funded research institutes. Some have sprung from the “Skunk Works” divisions of major engineering firms. Scientists there are given a longer chain to pursue interesting research than the average company. This ecosystem is critical to the success of deep technology, but it can also complicate the process of monetizing the end results of research. For example, a university may require ownership of a patent.

Deep technology challenges

One of the biggest challenges facing deep tech startups should be made clear by the takeaways in the last section. It takes a long time to produce a profitable product. In fact, the innovations they pursue far exceed today’s state-of-the-art, I never have Far from making a profit, they produce whatever they can sell.

When a deep tech company reaches the stage of actually releasing a product, they may find that the internal organization that has brought them R&D success is not suited for this new phase. This is an area where investors with experience working with other companies can really provide expertise in restructuring and introducing new leaders that can turn innovative prototypes into mass production and deliverables to customers. is.

What deep tech companies really don’t want to do is make promises they can’t keep, or blur the lines between their focus on innovation and more mundane services. Perhaps the most alarming example of the ultimate in deep tech is Theranos, a notorious health tech startup that claimed to be working on a quick blood test that required only a drop of blood. Theranos marketed an experimental device made from off-the-shelf parts, but his research into the technology failed, eventually leading to the company’s bankruptcy and the founder’s imprisonment.

deep tech company

To give you an idea of ​​what the current state of deep tech looks like, here are some active startups that have earned the deep tech label from various observers.

  • LabGenius: A biopharmaceutical company that uses machine learning to develop protein therapeutics.
  • BotsAndUs: Developing autonomous, AI-driven robots that can provide insight into warehouse operations.
  • Flexciton: aims to streamline the chip manufacturing process.
  • Gourmet: Creating sustainable lab-grown meat.
  • Deep Vision: Uses custom-designed chips to perform real-time video analytics and natural language processing.
  • AgNext: Combining AI, ML, IoT devices and data analytics to deliver food quality assessment.

Is your startup on this list, or are you interested in investing in the next big deep tech investment? I hope this article has helped you understand the landscape and start your journey.

Copyright © 2023 IDG Communications Inc.

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