Deep Tech vs General Tech

Globally, tens of millions of tech startups are founded every year, the majority of which fall into the Internet, mobile, e-commerce and collaboration/messaging sectors. After years of shying away from science, engineering, clean technology and medical technology startups, investors are beginning to invest in them. Collectively, these startups focus on what is called deep technology that is based on hardcore scientific research and backed by patents. But these startups face intense pressure to prove that their science can turn out huge revenues as quickly as the general tech hot consumer companies. Deep technology, or Deep Tech, oers the chance to solve big societal problems in healthcare, urban mobility and other issues. But alongside the opportunities are the challenges. The commercialisation of scientific discoveries are high-risk ventures which require large investments. They also need “patient” capital, that is, investors must patiently wait for financial returns. But because it has challenges, it does not mean that Deep Tech is not a good investment territory. This in-depth feature seeks to create greater awareness of the Deep Tech sector and its potential as an investment asset.

WHAT IS DEEP TECH?

Think Deep Tech as the PhD holders’ startup club where these scientists and engineers with PhDs and advanced degrees are solving large problems facing the world such as global warming, fighting cancers and trac congestions. No Angry Birds. No video gaming, messaging apps or media portals. Deep Tech can also be seen through the lens of Industry 4.0, where we are seeing rapid advances in technologies that are physical (autonomous vehicles, new materials, 3D printing, advanced robotics) or biological (genetic engineering, neurotechnology, bioprinting). Deep Tech as a phrase has entered the startup lexicon. It was first coined in 2014 by investor Swati Chaturvedi of VC firm Propel(x). She wanted to dierentiate the Deep Tech firms from the mass of general tech startups engaged in Internet, mobile and e-commerce work that are based on business model innovation, incremental service improvements or the deployment of standardised technologies

Deep Tech VS General Tech

General tech startups began in a big way with the arrival of the Internet in the 1990s. It is usually sparked o by an idea to disrupt a traditional business process. They are usually business-to-consumer (B2C) oerings. The strategy is to grow rapidly by raising funds to acquire as many customers as possible, and at the same time try to generate revenue. Few survive this growth journey. Some hang on, kept alive by venture funds instead of fading and dying quickly. Funding can be as low as US$10,000. Follow-on funding can sometimes be as high as US$1 billion if the objective like super app Grab is to acquire customers quickly in as many countries as possible. 

On the other hand, a Deep Tech company starts with a technology, usually based on an innovation or discovery in the lab by doctoral students and research scientists. The combination of technology and scientific talent forms the backbone of the startup. They are in fields like the life sciences, medical technology, clean technology, renewable energy, autonomous technology and other specific domains. Commercialising Deep Tech products requires many years. Research takes years before a discovery emerges. Translating the research into products is time consuming because the discovery has never been seen before and must be tested for safe use. Tests especially clinical trials involving people require a few rounds and are tedious to organise. Regulatory approval if needed, must be submitted to individual governments.

Startup growth numbers

Conclusion

Deep Tech is changing the world. There is now a global tussle in AI and life sciences, and for hard core scientific and research talent. For countries aiming to develop their own Deep Tech sectors, there needs to be a concerted eort to improve the ecosystem further. Bigger Deep Tech ideas pipeline and larger funds are needed.

The timing is right. There is great respect for hardcore science and engineering to solve big societal problems. Opportunities are abundant and becoming available. It is now about harvesting those opportunities.

Sources: SGInnovate, Straitstimes, DOS and ACRA