Why does Deep Tech matter today?

We are about to enter a new golden age of technological innovation and investment. The difference is that this time around, it won’t be about consumers, but industry.

Three-quarters of the world’s $100tn in gross domestic product is made up of traditional legacy industries — such as manufacturing, transportation, logistics, and healthcare — that have yet to be deeply transformed by technology.

And they will be transformed. It's already happening. Massive opportunities there for those willing to back the transformation….

So….Why does Deeptech matter today?

From electricity to the internet, and from cars to planes, almost every aspect of our modern lives has its roots in deep technologies.

Science and technology have become integral to our existence, opening up unimaginable possibilities and paving the way for extraordinary advancements.

Today, the rapidly evolving crossroads of global challenges like water scarcity, air pollution, and pandemics are driving transformational changes that need to be addressed, and deep tech innovation is emerging massively to fix these bugs through scientific breakthrough innovations problem-oriented.

Deep Tech Innovations have three key attributes:

🟡 They are problem-oriented.

They focus on solving large and fundamental issues, as is clear from the fact that 97% of deep tech ventures contribute to at least one of the UN’s sustainable development goals.

🟡 They operate at the convergence of technologies.

For example, 96% of deep tech ventures use at least two technologies, and 66% use more than one advanced technology. About 70% of deep tech ventures own patents in their technologies.

🟡 They mostly develop physical products, rather than software.

83% of deep tech ventures are engaged in building a physical product. They are shifting the innovation equation from bits to bits and atoms, bringing the power of data and computation to the physical world.

Why Deeptech Innovations Are Worth Watching For Industry and Investors

Despite being at an early stage, the rapid growth of deep tech investment is a testament to its immense potential and the increasing recognition of its value.

In fact, deep tech investments have seen significant growth truly remarkable, quadrupling to over $64 billion in 2020 with an impressive compound annual growth rate (CAGR) of 61.8%.

Moreover, the proportion of funds investing in Deeptech doubled from 10% to 20% between 2010 and 2020, underscoring the increasing confidence in this sector's potential.

Deeptech startups hold a significant advantage in the market due to their strong technology-based competitive edge. Unlike traditional startups, deep tech ventures possess advanced and cutting-edge technologies, enabling them to target multiple markets effectively. This versatility broadens their potential customer base and enhances their revenue streams. As a result, deep tech startups have the potential to create substantial value, estimated at up to $15 trillion over the next two decades.

What makes deep tech startups even more compelling is their alignment with environmental, social, and governance (ESG) objectives. These startups actively contribute to sustainable development and tackle global challenges through their innovative solutions. This not only creates a positive impact on society but also resonates with investors who prioritize ESG considerations.

Despite the remarkable growth and potential, deep tech investment is still at a nascent stage. This presents a unique opportunity for investors, as valuations of deeptech startups remain affordable relative to their upside potential. By recognizing and capitalizing on this emerging wave of innovation, investors can position themselves at the forefront of a transformative industry, poised to revolutionize various sectors and create significant economic and societal impact.

Why Deep Tech Innovations Are Worth Watching To Drive Positive Impact

The fundamental value of deep tech is to pioneer new solutions that solve society’s biggest issues and harness cutting-edge technologies to create tangible global and societal shifts– this applies to everything from chronic disease, climate change, clean energy, and food production.

Therefore, the solution to the world’s most pressing problems included in the 2030 UN agenda depends largely on the success of the Deep technologies in reaching the market and masses.

Moreover, Deeptech creates new markets and drives economic and societal progress, essential for long-term success.

The Deeptech Dilemma

Despite its promising capabilities, Deeptech often faces significant hurdles in reaching the market. In fact, today, a staggering 90% of Deeptech ventures fall into the so-called Valley of Death without reaching ever the market and impeding their potential impact on society.

This is what we call The Deeptech Dilemma:

What makes Deeptech so critical to solving some of the most important challenges we face in the 21st century - Sciences and Technologies - Unfortunately, are also the cause of their problems in reaching the market.

In fact, the very nature of its reliance on cutting-edge technology and highly specialized expertise flows into unique complexity, fragmentation, and risk profiles far from more conventional Saas and IoT Startups.

In conclusion, deep tech represents a significant opportunity to address critical global challenges across various industries, particularly as economic and environmental demands grow. In 2024, investment in deep tech sectors like AI, quantum computing, and sustainable energy has accelerated, reflecting its impact on industries including healthcare, manufacturing, and defense.

These technologies support solutions for climate change, health crises, and resource scarcity, all of which demand innovative approaches. Despite current obstacles—such as complexity and high development costs—advancements in regulatory frameworks and increased venture support are easing market entry.

Additionally, as deep tech aligns with ESG objectives, it becomes even more appealing to investors who value long-term social impact alongside returns. This convergence of technology and societal benefit underscores deep tech's role in fostering sustainable economic growth and transformation, making it a sector well-positioned for future impact and expansion​.