What Is Deep Tech? Life After Consumer Apps

Deep technology is a term that describes organizations (usually startups) that focus on technologies that require significant technical or scientific advances away from end-user products or services. The term deep technology differs from the consumer-related applications that most people associate with the technology industry. So the Uber for X app, no matter how new or useful it is, isn't the latest technology to let you buy something on your phone. New materials science techniques that put faster or cheaper chips in phones will be the latest technology, and innovations in cellular transmission will bring faster or more reliable Internet connections to phones.

This sentence It was created in 2014 by Swati Chaturvedi, founder and CEO of the online investment platform Propel(x). In a 2015 LinkedIn post, he coined the phrase, saying it was meant to distinguish "startups in life sciences, energy, clean tech, information technology, materials and chemicals" from "unicorn" startups. In the mid-2010s, he chased a lot of venture capital. Propel(x) was created to attract angel and venture capital funding to high-tech companies, so speaking is still part of the business side of the industry, not a technical term. But as mobile and web startups have faded into obscurity over the past decade, so has the demand for companies that want to be at the forefront of the latest technologies.

We need to protect the technological materials that will help us move forward. -Swati Chaturvedi

What is Deep Technology?

Propel(x) may have popularized the phrase, but DeepTech has taken on a life of its own in tech and venture finance circles these days. As such, there is no central authority that can declare what deep technology is or isn't, and the term carries baggage and financial potential, so some take the opportunity to broaden its meaning. However, there are a certain set of technologies that are permanently restricted as deep technologies.

Elements and purposes of deep technology

What do all these technological fields have in common? There are many threads that connect them.

• Solutions to overcome physical problems . For consumer-facing applications, much of the innovation lies in providing seamless connections between customers and existing businesses and assets, reducing efficiency. High-tech startups, on the other hand, face challenges at the level of physical reality, not institutions and human networks. create new drugs or room temperature superconductors or create new computational paradigms using quantum physics; These are places where deep tech startups operate.
• Combine different technologies into larger solutions . Tesla and other electric car makers must connect different fields when building their cars, combining computer and chemical engineering to produce smaller, cheaper batteries that people still want to drive. In another example, you can try to use artificial intelligence to find new medicines for diseases. These are the challenges deep tech startups face.
• Solve global image issues . We hope that today's high-tech startups often seek to solve fundamental problems that plague humanity. No offense to pizza delivery apps (because they don't like pizza), but tech companies want to apply their knowledge to issues like disease or climate change, or inspire major breakthroughs, in terms of computing power or manufacturing processes.

One thing to note here is that many of these areas are within the "traditional" technology sector, while some are outside of it. As Chaturvedi said in his 2021 open letter.

Our concern is that most people still do not think of deep technology only in the field of computing and information technology. It is also a coincidence that people mention life sciences or industrial technologies and other innovations in the same breath. Because of this narrative, venture capital is focused on all things computing ("AI for everything" is the buzzword these days.) But other important deep technologies that have the potential to change the world still don't get much funding. ...just a few years ago [Tesla] money. He had great difficulty raising funds and depended on loans from the government and Elon. Musky silver. Tesla is an electric car, the cornerstone of which is battery technology, which is truly supported by intelligent battery management systems. But fundamentally it is chemistry . We have to win. We need to protect the technological materials that will help us move forward.

What sets deep technology apart?

In order to achieve the goals outlined above, deep technology companies have different business needs and processes than customer-facing companies. This is why the category was originally developed within the venture capital community. Potential investors should understand that deep tech companies require a large initial investment and a longer path to profitability or an anticipated IPO or acquisition. .

Here are some practical ways deep tech companies are doing things differently:

• Move deliberately and handle things carefully . For most tech startups in the early 21st century, they followed Facebook's mantra: "move fast and break things," in other words, make very small iterative changes to your product or platform offering. They push forward new features and state of the art, even if sometimes things go wrong in the process. (In the software world, this philosophy is defined and developed by CI/CD.) Along the way, companies may find that what they thought was their greatest strength has been sidelined and moved to another department or strategy. : It's easy to forget that this attitude is so ingrained in tech company culture that it's historically rare. Moreover, it is not a viable strategy for the long-term projects that high-tech companies manage; The innovations pursued by these companies cannot be done halfway, as they face high regulatory hurdles and stringent security requirements.
• It is a process, not a product . Software can actually be developed by anyone with a computer, and even most physical products can use existing factories and supply chains after the prototypes are made. But by nature, many high-tech products require large investments even after the end of the R&D phase. They may require the assembly of specialized factories or entire new supply chains before a salable product can be produced at a profit.
• Connect to the wider ecosystem . Angel investors or VCs are interested in benefiting from a successful product launch because of their deep technology investment. But due to the long lead times and risk of failure involved in such ventures, for-profit organizations cannot be the only players here. Many profound technological innovations come from universities and government-funded laboratories; Others come from the "skunkworks" division of large engineering companies, where scientists are assigned to do more interesting research than is typical for the company. This ecosystem is critical to the success of deep technologies, but also complicates the process of monetizing search offerings. For example, universities can claim ownership of a patent.

The challenges of deep technology

One of the biggest challenges facing deep tech startups should be addressed in the bullet points of the last section. It takes a long time to produce a profitable product. In fact, the innovations that follow are so far ahead of the state of the art that they will never produce anything salable, let alone profitable.

As high-tech companies reach the manufacturing stage, they may find that the internal organization that has made them successful in research and development is not suitable for this new phase. This is an area where investors with experience working with other companies can provide restructuring expertise or bring new leadership to a new innovation prototype that can be mass-produced and delivered to customers.

What deep tech companies don't want to do is promise that they can't or won't blur the line between their purpose and what's simple. Perhaps the most recent example of a deep-tech alert is Theranos, the well-known health technology company that is working on rapid blood tests that only require a drop of blood to work. Theranos failed in its extensive technological research and went to market with laboratory equipment built from the ground up, eventually leading to the company's bankruptcy and prison terms for its founders.

High-tech companies

To give you an idea of ​​what the current deep tech landscape looks like, here are some active startups that have been labeled as deep tech by various observers.

• Labgenius. A biopharmaceutical company that uses machine learning to develop therapeutic proteins.
• BotsAndUs develops AI-powered autonomous robots that can provide insight into warehouse operations.
• Swap. It tries to simplify the chip manufacturing process.
• food Creating sustainable lab-grown meat.
• A deep look. Real-time video analytics and natural language processing using a custom chip.
• AgNext offers food quality assessment with AI, ML, IoT and data analytics tools.

Your start is for this list. Or are you interested in investing in the next big cutting edge technology? I hope this article has given you an understanding of the topography so you can begin your journey.

Copyright © 2023 IDG Communications, Inc.

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