“We wanted flying cars. Instead, we got 140 characters,” Peter Thiel said once. You’ll probably encounter this quote once in a while when you start learning about deep tech, as it grasps the essence of why we need to invest in these technologies.
Yes – those 140 characters can be a delightful addition to your lunch break scrolling. But the likes of Twitter indeed aren’t a flying car, a breakthrough medical innovation, or a machine that can think for itself.
Deep tech companies may not be in the public eye as much as the flashy digital platforms and apps. However, it’s them working on innovation that will redefine the way we live. Here’s why we need to invest our time, attention and resources to deep tech, as analyzed in a report by BCG and Hello Tomorrow.
Our future depends on it
Deep tech innovation solves some of the world’s most significant problems and, by extension, defines our future. A vast majority of deep tech ventures (97 %) even contribute to the UN’s sustainable development goals. That’s quite a number! They often strive to tackle the problems that seem impossible to solve, and the results can be groundbreaking.
Most deep tech companies work on physical products and operate at the convergence of three approaches: engineering, science, and design. It could be that brand new vaccine that arrived at a miraculous speed, a sophisticated quantum computer with incredible calculation possibilities, or a flying taxi that will transform your city’s transportation system. While deep tech ventures could make investors impatient, as it takes time to launch, they sure are paying attention anyway.
Why are investors on the lookout for deep tech
The report estimates that over the last five years, investments into deep tech have more than quadrupled. While investors only dedicated $15 billion in 2016, it was around $60 billion in 2020. The term deep tech was actually coined by an investor – Swati Chaturvedi, CEO of PropelX. This company only funds deep tech startups, which should be founded on a scientific discovery or true technological innovation. They generally fall under categories of life sciences, computer science, energy, clean technologies, materials, but are not limited to these. As Chaturvedi explained in her blog, PropelX believes it’s imperative to support these companies because they advance humankind. But it’s not charity at all; on the contrary, they are a promising investment.
“We will not cure cancer by investing in a health tracking app. Nor will we grow more food, improve our energy efficiency or perform more efficient surgery by investing in internet companies or mobile apps. To achieve these goals, we will have to invest in real things – in cancer drugs, new energy sources and storage, new medical devices… That is why investing in deep technologies is important – because, without these technologies, mankind does not move forward,” Chaturvedi wrote, acknowledging that deep tech’s attractive economic incentives are equally important.
It appears that 2021 could be the year of deep tech: it now represents a quarter of all venture capital investment in Europe.
It’s the fourth wave of innovation, and it’s pretty damn impressive
The previous – third – wave of innovation we’ve experienced was digital. Think Silicon Valley, Facebook, and biotech. The golden digital era became a stepping stone for the fourth wave of innovation, and so deep tech could take it from there. Moreover, it could further evolve due to existing advanced technologies. Falling costs of inputs, an open approach to innovation, and easy access to information are also helping.
The report explains you can observe how deep tech innovation happens across several “moments of truth”. First, the companies consider if reality could possibly be different. Secondly, they ask if there could be a way to develop a solution and, if so: can it be built today? Lastly, they have to figure out what circumstances need to occur for this solution to become the new normal. The creators of mRNA-based vaccines, for example, answered all of these questions in a surprisingly brief timeframe. Due to the unprecedented mobilization of resources, they are already saving millions of lives.
The vaccine rollout shows that deep-tech innovation at this enormous scale can – and needs to – happen in many areas besides medicine. Climate change and keeping up with artificial intelligence come to mind as the most urgent. Humanity might be running out of time, but investing resources and attention to deep tech gives us a glimpse of hope for another era.