The Next $100B Deep Tech Market No One Is Talking About
Advanced Materials: The Quiet, Strong Revolution Redefining Entire Industries
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For the last two decades, the industry has been optimized for software—scalable, capital-light, and asset-free. That playbook worked. It minted giants. But the next frontier isn’t digital.
It’s physical.
Right now, a new class of startups is pushing the boundaries of materials science, reshaping aerospace, semiconductors, energy storage, and defense.
Lighter, stronger composites that redefine manufacturing.
Next-gen semiconductors that push AI beyond silicon’s limits.
Battery breakthroughs that eliminate dependence on lithium.
And yet, most VCs are still looking the other way.
The common narrative? Too slow. Too hard to scale. Too different from software.
The reality? Industrial giants, corporate venture arms, and sovereign wealth funds are already moving in.
The next billion-dollar companies are being built right now. The investors who understand how to evaluate, fund, and scale these businesses will gain an edge that few others see coming.
This piece is built on the distilled wisdom of leading investors and founders, combined with deep research from academic and institutional sources. Now, let’s dive into the patterns, tactics, and dynamics that can shape a powerful framework for capturing value in this space.
Questions This Deep Dive Will Answer:
What are the five essential questions you must ask a materials startup before investing?
What’s the most common red flag in materials startups that kills venture-scale returns?
What’s the one metric that actually matters when scaling a materials startup?
How do you separate deep-tech moonshots from ideas that will never leave the lab?
What’s inside a top investor’s due diligence checklist for materials startups?
What’s the hidden bottleneck that prevents most materials startups from reaching scale?
What are the most likely exit paths for an advanced materials startup?
The Next $100B Deep Tech Market No One Is Talking About
In the summer of 1994, Jeff Bezos famously set up shop in a small garage in Bellevue, Washington, with some freshly purchased books and a rudimentary internet connection. Back then, the World Wide Web was a curiosity—an academic plaything in the eyes of most investors. Although a small cluster of visionaries saw its potential, the majority didn’t believe it would ever become a mainstream platform, let alone a transformative force in commerce, entertainment, and social interaction.
Fast-forward three decades. Software has become the very foundation of business, with VCs like Sequoia, Benchmark, and Andreessen Horowitz reaping extraordinary returns for backing the digital revolution early on. Their track records shaped the venture landscape, making “software eats the world” an almost unassailable mantra.
Now, imagine the next trillion-dollar disruption is not about lines of code, but about something far more tangible: the manipulation of matter itself.
The DNA of Revolution
Throughout history, each industrial revolution has been catalyzed by materials innovation. The Bronze Age enabled the rise of early civilization. The Iron Age revolutionized warfare, agriculture, and infrastructure. The 20th century belonged to two breakthroughs: plastics and semiconductors. One reshaped manufacturing, the other gave birth to computing—and, eventually, the AI revolution unfolding today.
Yet, in 2025, advanced materials remain one of the most overlooked and undervalued frontiers in venture capital.
While billions flow into AI, and fintech, a quiet transformation is unfolding in deep-tech labs from Zurich to Seattle—one that could redefine industries from aerospace to energy, semiconductors to packaging. Scientists are designing materials at the molecular level, unlocking properties that once lived in the realm of science fiction:
Composites lighter and stronger than steel, redefining how we build everything from cars to skyscrapers.
Biodegradable polymers, poised to replace petroleum-based plastics in packaging, textiles, and medicine.
Next-generation semiconductors, capable of pushing AI performance far beyond the limits of silicon.
I vividly recall a conversation at a conference while I was still a PhD student with a researcher from a European lab who described advanced materials as “the DNA of the next industrial revolution ”
It’s a compelling way to frame the opportunity.
Just as genetic breakthroughs reshaped medicine, materials innovation is rewriting the rules of industrial production, supply chains, and sustainability.
Consider the transition from conventional plastics to plant-based polymers. This isn’t a marginal improvement—it’s a fundamental shift in how we manufacture, use, and dispose of products. The implications stretch across industries, affecting everything from corporate sustainability mandates to global trade flows.
The Tangible Magic of Advanced Materials
The Energy Storage Race
The future of batteries is shifting. Lithium-ion, once untouchable, is hitting its limits. The next wave?
Solid-State Batteries → Toyota & QuantumScape are betting on safer, lighter cells with 2-3x the energy density.
Synthetic Graphite → With 75% of graphite refined in China, Novonix is securing U.S. supply for Panasonic & Stellantis.
Sodium-Ion Breakthroughs → CATL’s new tech could cut EV costs by removing lithium dependency.
The Semiconductor Rebuild
The last three years exposed a brittle chip supply chain. Governments & companies are rewriting the playbook, starting with materials.
Thintronics → Reinventing dielectric materials for AI chip packaging.
Mitsubishi + Boston Materials → Pioneering thermal materials to boost chip efficiency.
The CHIPS Act → Less about "more chips" and more about securing material supply chains beyond Taiwan & China.
Defense: Betting Big on Materials
For the military, materials aren’t a cost—they’re a strategic weapon.
Stealth & Hypersonics → Carbon-carbon composites survive Mach 5+ heat; radar-absorbing coatings make aircraft vanish.
Body Armor & Exoskeletons → Graphene plates are lighter yet stronger; soldier exosuits need resilient composites to reduce fatigue.
Battlefield Energy → Drones, lasers, & targeting systems demand ultra-dense, combat-proof power—solid-state, supercapacitors, lithium-sulfur.
However, VCs seem Shy with Materials Startup…
It’s not about a lack of market potential—far from it. The advanced materials sector is on track to hit $127.28 billion by 2034 according with Precedence Research. The challenge? The traditional venture playbook wasn’t designed for this space. VC thrives on capital-light investments, rapid iteration, and software-driven scalability. Advanced materials, by contrast, demand manufacturing, supply chains, and—most critically—time.
The Software-Centric Mindset – Venture capital has been shaped by the success of software: fast scaling, low CapEx, clear network effects. Materials innovation operates on a different timeline—but that doesn’t mean it’s unscalable.
The “Hard to Scale” Myth – There’s an assumption that materials breakthroughs take decades to commercialize. Yet, Tesla’s battery advances, SpaceX’s reusable rockets, and AI’s chip evolution all depend on rapid materials innovation.
Deep Tech Requires Deep Understanding – Unlike SaaS, where investors can analyze CAC and LTV, materials investing requires a grasp of chemistry, physics, and global supply chains—a skillset that many VCs haven’t developed.
A few months ago, I was speaking with a VC who built his career investing in enterprise SaaS. He had been watching deep tech with growing curiosity but voiced a fundamental concern:
“Scalability is everything in venture. The question isn’t whether materials innovation is important—it’s whether it can scale like software. That’s where it gets tricky.”
He wasn’t wrong. The software-first venture mindset favors high margins, rapid iterations, and asset-light businesses. Advanced materials, on the other hand, demand infrastructure and patience.
But here’s the disconnect: the industries that rely on materials innovation aren’t just growing—they’re fundamentally transforming.
Semiconductors, defense, aerospace, energy storage—these aren’t optional markets. They’re the backbone of the modern world. While traditional VCs hesitate, corporations, governments, and industrial funds are quietly investing billions into next-gen materials. Trillion-dollar industries are being reshaped before our eyes.
But…Strategic Capital Is Already Moving
One of the biggest misconceptions in venture capital is that corporations are slow and reactive, while venture capital firms (VCs) are agile and forward-thinking. Yet, in the case of materials innovation, the reverse seems to be true.
Corporate venture arms—including Applied Ventures (Applied Materials), BASF Venture Capital, NOVA (Saint-Gobain) and Diamond Edge Ventures (Mitsubishi Chemical)—have been consistently deploying capital into advanced materials, while most traditional VC firms remain hesitant.
General Motors is thinking beyond electric vehicles—it’s securing its future supply chain. That’s why GM Ventures co-led a $39 million round in Addionics, a company developing next-generation battery electrodes designed to increase energy density and accelerate charging. It’s also why they’ve backed Forge Nano, a company pioneering atomic layer deposition to enhance battery lifespan. These investments aren’t experimental; they are strategic bets on where the industry is heading.
In semiconductors, Applied Ventures, the investment arm of Applied Materials, is funding foundational technologies that power AI. Their portfolio includes MICROOLED, a company developing ultra-low-power OLED microdisplays, positioning itself at the center of next-generation augmented reality interfaces and AI-powered optics.
Aerospace and defense are undergoing similar shifts. Mitsubishi Chemical’s Diamond Edge Ventures is backing Boston Materials, a startup creating advanced thermal materials for semiconductors, while NOVA Saint-Gobain is supporting FibreCoat, a company that develops thermoplastic-coated fibers for composites and aluminum-coated fibers for shielding applications, such as electromagnetic interference and heat sinks. As AI models grow exponentially more complex, managing heat dissipation and energy efficiency is becoming just as critical as chip performance itself.
Government capital is following a similar trajectory. The CHIPS Act, the Inflation Reduction Act, and Europe’s Green Deal are channeling billions into materials innovation, targeting semiconductor packaging, energy storage, and sustainable manufacturing. The U.S. Department of Commerce has committed $300 million to post-silicon advanced packaging research, while companies like Novonix are securing multi-year supply deals with Volkswagen and Panasonic to help de-risk global battery supply chains.
Why Corporations Are Moving Faster Than VCs?
One of the biggest misconceptions in venture ecosystem is that corporates are slow and reactive, while VCs are agile and forward-thinking. Yet, in the case of materials innovation, the reverse seems to be true.
This isn’t happening by accident. Large industrial firms have structural advantages that make materials investments more viable for them:
They operate on longer time horizons. Unlike venture funds with fixed 10-year cycles, corporates can invest in technology that may take years to commercialize—because they’re thinking about long-term strategic advantage, not just financial returns.
They have built-in go-to-market pathways. A startup developing a next-generation polymer doesn’t need to build an entirely new market from scratch if it partners with a corporate that already has manufacturing scale. That’s why corporate-backed materials startups often have a faster path to commercialization than their deep tech peers in other fields.
They understand regulatory tailwinds. Whether it’s Europe’s Green Deal, the Inflation Reduction Act in the U.S., or China’s aggressive industrial policies, corporates are aligning their investments with regulatory shifts that are already reshaping industries. Many of the world’s largest firms—from automotive to consumer goods—will be required to use sustainable materials in the coming decade, giving early movers a built-in advantage.
How to Build (and Back) the Next Advanced Materials Winner
Alright, let’s get to it—how do you capture value in advanced materials? How do you spot the winners? And more importantly, how do you help them scale?
In 2011, Marc Andreessen famously said, “Software is eating the world.” Thirteen years later, venture capital still revolves around that idea—trained to evaluate SaaS deals through CAC, LTV, and ARR like it’s scripture.
And yet… despite the fact that advanced materials are quietly reshaping everything from EV batteries to aerospace to defense, the venture playbook for this space is still, well… all over the place.
There’s no repeatable formula like in software. No “just check net dollar retention” or “make sure the LTV/CAC ratio holds up.” That’s because raw materials, manufacturing processes, supply chain bottlenecks, and regulatory hurdles don’t fit neatly into a pitch deck slide.
Instead, assessing these companies feels more like detective work—piecing together regulatory signals, analyzing pilot projects in labs, understanding the nuanced needs of global manufacturers, and, of course, embracing pivots… multiple times.
If you’re stepping into advanced materials—especially for the first time—the landscape can feel like uncharted territory. You might find yourself asking:
How do I evaluate a startup’s scientific claims?
Who sets industrial standards, and how long does approval take?
What does traction even look like in a materials context?
This piece is built on the distilled wisdom of leading investors and founders, combined with deep research from academic and institutional sources. Despite the diverse nature of advanced materials, common patterns, tactics, and dynamics emerge that can shape a powerful framework for capturing value in this space.
Let’s explore them together!
Have the founders done their homework?
Many advanced materials startups are born in university labs. Founders (often scientists themselves) assume that if their discovery is impressive enough, the market will beat a path to their door. But real-world traction doesn’t come from an elegant scientific paper; it comes from industrial partners who commit budgets to pilot production and scale-up.
The “Technology Push” Trap
It’s easy to get lost in the details of molecular structures or thermal degradation curves. Investors and corporate buyers can't all be chemists! Moreover, they care about what your technology does—can it lower weight, reduce cost, or solve an environmental headache?
Ok, there is a polymer that tolerates 2,000°F, is there a founder able to go beyond the exotic chemistry and articulate how the solution will enable new possibilities in hypersonic flight or advanced manufacturing? Where does he base his assumptions?
Deep Tech Without Deep Science: The 3 Questions That Matter
While advanced materials involve complex science, successful founders and investors focus on strategic, not technical, questions: