Scientific research has long been viewed as a dichotomy of "Basic or Applied." We owe this perspective to Vannevar Bush. Mr. Vannevar Bush headed the Scientific R&D for the USA during the Second World War. As the administrator who mobilized large resources of scientific talent to drive innovation on various fronts, in his famous report “Science, The Endless Frontier,” which he wrote at the request of President Roosevelt, he argued that scientific research is a dichotomy between applied and basic research and called for further allocation of monetary resources for scientific commercialization. He believed that through this endeavour, the benefits of inventions and scientific breakthroughs would trickle down to the larger economy.
While the Applied and Basic distinction is too simplistic to fully capture scientific research, Donald E. Stokes, in his book "Pasteur’s Quadrant: Basic Science & Technological Innovation," proposes a two-dimensional framework to assess scientific research based on its potential for usefulness and commercialization.
This "Pasteur’s Quadrant" can be a handy tool for anyone in deep tech, be it an investor, operator, or founder, to assess the venture’s underlying scientific research and the technological risks involved.
What is Pasteur’s Quadrant?
Stokes, in his book, plots two axes:
Y-Axis: Research Inspired by the Quest for Fundamental Understanding, where scientific inquiry is driven by the curiosity of the scientist to explain certain observable facts of the field and push the understanding forward.
X-Axis: Research that is inspired by considerations of using science for practical applications in the real world.
This two-dimensional thinking then leads to different kinds of quadrants, as shown below:
Bohr’s Quadrant: This quadrant is where research is driven by the aim of discovery, with no thought of invention and use case development like Neils Bohr’s model to explain the atom.
Edison Quadrant: This is opposite to Bohr’s Quadrant, where the research is purely driven with the aim of invention without developing the underlying science, such as Edison’s invention of the light bulb in his lab, where there was endless tinkering to engineer products that provide value to the world.
Pasteur’s Quadrant: The top right, which we all love in two-dimensional graphs and startup pitch decks, is in this case Pasteur’s Quadrant. It is characterized by use-inspired basic research, where scientific research is driven and developed with the end goal of invention as well as understanding. The quadrant is rightfully named after Pasteur, who not only gave us the germ theory of disease but also the first engineered vaccines for the world.
So, how can we use this while investing in, operating, or running deep tech companies?
Deep technology startups all have inherent technology risks that need to be managed. They require us to keep moving from pushing the applied use case development forward, while also going back to understanding and improving the basic scientific understanding.
Balancing Fundamental Research with Practical Applications: Deep tech startups deal with cutting-edge technologies that require a solid foundation in fundamental research. However, for commercial success, they need to focus on which aspects of science at the current development level can lead to building commercial applications. This healthy balance is crucial to assess the underlying technological risks in the venture.
Evaluating R&D Efforts in the Company: By positioning a startup's R&D activities and the science on which it is based within the quadrant, investors and stakeholders can evaluate the startup’s strategy. For instance, if a startup’s work falls predominantly in 'Bohr’s Quadrant', it might indicate higher risks due to the longer path to practical application and would require more funding. Conversely, work in 'Pasteur's Quadrant' might suggest a more balanced approach with potentially quicker paths to market and revenue. In some cases, the underlying scientific research might be mature enough to focus on taking the invention quadrant approach of Edison.
Funding and Investment Decisions: Understanding where a startup’s work falls in Pasteur's Quadrant can influence funding decisions. Projects in 'Pasteur’s Quadrant' might be more attractive to investors looking for a balance of innovative, groundbreaking work and practical, marketable results.
Paths to Commercialization: Collaboration and Partnership Opportunities: The quadrant analysis can also highlight potential collaboration or partnership opportunities. For example, startups that are heavily focused on basic research might benefit from partnerships with organizations focused on application and commercialization. Similarly, organizations focused on use case development and prototyping using underlying science can benefit from linkages to research labs to clear out any underlying technological risks
Like all frameworks, there is never a one-type solution for evaluating companies and deciding on a course of action. These frameworks would just provide us with a new lens to analyse the deep technology companies in a structured manner and help us make decisions.
Investing, Operating or funding a deep technology venture is a long-term game for all stakeholders and the risks are very inherent in the underlying science on which they are based.
By switching between product development and eliminating of underlying scientific risks true impactful inventions happen. During my work with deep technology companies, I try to use this lens to build strategies to eliminate underlying risks and also utilise venture resources more optimally to have useful applications or products.