A question I keep getting asked frequently is about the scope of Deep Tech and the characteristics of ventures being built in this realm. Therefore, I wanted to dig into the origins of the name myself and share some distilled insights through this blog post.
Deep Technology is a term that frequently surfaces in the discussions around technology, startups, innovation, and venture capital. At its core, it represents technology grounded in research and scientific breakthroughs, poised to make a substantial impact on the world. In the dynamic landscape of innovation and tech startups, we often discuss problems and solutions. Deep tech ventures distinguish themselves by offering solutions rooted in science and groundbreaking technology.
Origin of the Term
The term "deep tech" was coined in 2015 by Swati Chaturvedi, the founder of Propel(x), a platform dedicated to angel investing in deep-tech startups. Initially, it sought to encompass startups in sectors like life sciences, energy, clean technologies, computer sciences, materials, and chemicals. Over time, its widespread usage in technology media articles has made it a common term in the industry.
Defining Deep Tech
The realm of deep tech is shaped by two overarching concepts.
The Material Approach: This perspective categorizes deep tech based on sectors or the type of product being developed. Commonly, trending frontier technologies like AI, Quantum Computing, Materials, Robotics, and Biotech fall under this classification. Essentially, what is considered deep tech can evolve as these technologies progress and become mainstream. Ventures in deep tech are often characterized by breakthrough or paradigm-changing technological innovations rooted in scientific research.
Barriers to Entry Approach: According to an MIT paper, deep tech ventures exhibit two distinct barriers to entry.
Information Asymmetry: Involving a lack of knowledge and significant uncertainty in the innovation and development of technology, leading to underlying technical risks. Ventures fall into different stages of technology development and each of these stages has a different level of risks involved.
High Capital Intensity: The development of deep tech ventures necessitates substantial capital for R&D to eliminate the associated risks related to regulations, scale & production, and technology use case fit.
Building companies in the deep tech domain demands a fundamentally different approach, requiring serious innovation and new strategies for technology commercialization and risk elimination.
Identifying Deep Tech Ventures
If you encounter a startup and wonder if it falls within the deep tech realm, consider these criteria:
Positioned at the frontiers of knowledge, requiring R&D for technological progression, often measured by Technology Readiness Levels (TRL Levels 1-9).
Utilizing underlying technology to develop tangible products and processes.
Linked to Higher Education Institutions and R&D clusters.
Driven to solve problems or create large-scale impact.
Creating dynamic cycles of iteration with a focus on de-risking and commercialization.
Innovation lies at the core of building deep tech ventures, shaping scientific breakthroughs and new technologies into impactful products. When done effectively, these ventures can reshape entire markets and address significant global challenges.
At Unusual, some of our innovation projects involve working with inventors and scientists, envisioning new products based on deep and frontier technologies and designing ventures for commercialization. Eliminating technical risks is a prerequisite for building great deep-tech ventures, but true innovation lies in shaping technology or scientific breakthroughs into usable products that can redefine markets and achieve commercial viability.
Further Reading :
BCG has released a deeply insightful report on Deep Tech and a good read for those interested.