🤖 #4: Vivian's Deeptech Insider: What is DeepTech & Why invest in it?

Jobs at Ki Hydrogen, Riverlane, NFX, Newlab

Author

Vivian Chan, PhD
August 15, 2024

Hello and welcome to #4 edition of the monthly Vivian’s Deeptech Insider. If you have a relevant job to share, let me know!

Before we dive into this edition’s topic & roles, I have 2 resources to share:

Resources

  • The SOSV Climate Tech Summit is going virtual the week of October 14-18, and it's completely free to attend. By registering now, you'll receive regular updates on the event, including early notifications for limited breakout sessions. Don't miss this opportunity to stay connected with the latest in climate tech!

  • Get a 20% discount (applied at checkout) for the Resilience Conference: Startups, Security, Defence in London on September 26-27 through SOSV.

Deep Dive (this edition’s topic):

What is Deeptech? 🚀

Deeptech, short for deep technology, represents a category of innovation driven by scientific breakthroughs and advanced engineering. Deeptech ventures aim to address critical global challenges such as climate change, healthcare, and resource scarcity. These innovations mark the first time that fundamentally new science and engineering are being translated into products and companies, similar to the transformative waves of innovation sparked by the invention of electricity or the transistor. These companies typically involve higher technological risk but lower market risk, necessitating a different approach to investment and development.

Key Technologies include:

  • Artificial Intelligence & Machine Learning: Transforming industries by automating processes, analysing big data, and enhancing decision-making.

  • Biotechnology: Innovating in areas like drug discovery, genetic engineering, and sustainable agriculture.

  • Blockchain: Providing secure and transparent solutions in fintech, supply chain management, and beyond.

  • Quantum Computing: Offering unprecedented computational power for complex problem-solving.

  • Advanced Robotics & Automation: Enhancing manufacturing, logistics, and service industries.

What Makes Deeptech Different?

Deeptech stands apart due to its focus on long-term, research-driven projects that require significant investment and time to develop. Unlike general tech, which often iterates on existing technologies, Deeptech pioneers new scientific breakthroughs that can create entirely new markets or disrupt existing ones. For example, AI and Big Data are pivotal in healthcare innovations, enabling personalised medicine and predictive analytics, while blockchain is transforming the fintech landscape with enhanced security and efficiency.

Why Invest in Deeptech?

Investing in Deeptech is investing in the future. These startups not only set new industry trends but also offer solutions to some of the world's most pressing problems, making them attractive to both investors and large corporations. The growing investor interest is evident in the $16.6 billion raised by European Deeptech startups in 2023. The sector has been growing at a compound annual growth rate (CAGR) of 22% since 2016, underscoring its rapid expansion and importance in the tech ecosystem.

Source: Dealroom

Deeptech startups require significantly more investment than typical tech ventures due to their focus on groundbreaking scientific innovations and complex engineering solutions. According to BCG and Hello Tomorrow, these companies often need up to 5 times more capital due to extensive R&D costs and longer development cycles. The median pre-money valuation for Deeptech firms is 25-50% higher than non-Deeptech companies, as reported by PitchBook, reflecting their potential for high-impact innovation.

The global Deeptech market, valued at $300 billion in 2020, is set to hit $800 billion by 2027, driven by AI, robotics, and quantum computing. AI alone could add $15.7 trillion to the global economy by 2030, thanks to Deeptech innovations in areas like autonomous vehicles and precision medicine. Dealroom data shows a surge in deals over $100 million, reflecting growing investor confidence in scaling Deeptech startups, which are increasingly vital for tackling global issues like climate change and food security.

These stats show Deeptech is more than a niche—it's a key innovation frontier with big risks and big rewards. Stay tuned for eye-opening insights into the European VC Deeptech scene in an upcoming edition. Meanwhile, let’s dive into the jobs…

- Vivian

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Jobs at Deeptech startups:

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