Deep Tech

Deep Tech is an umbrella term for young companies whose product is built on a scientific discovery. So the core is not a clever business idea, but something that simply wasn’t technically possible before. Such companies often emerge directly from universities or research institutes. A new type of battery, a process for manufacturing computer chips, or a drug developed in a lab are typical examples. The counterpart are companies that merely recombine existing technology, such as an app for ordering food. With Deep Tech, the technology itself is the hurdle, not the market.

Why states and funds pour in billions

Deep-Tech companies take much longer than other startups before they earn money. Ten years from founding to the first product sold is normal. During this time, money flows out and hardly anything flows in. So anyone who invests must have a great deal of patience.

Nevertheless, interest is high, because the potential profits are too. If the breakthrough succeeds, the technology is often protected by patents. Competitors can’t simply copy it, as would be the case with an app. A lead of just a few years can thus turn into a dominant market position.

On top of that, there’s a political motive. Chips, batteries, and medicines are considered strategically important for a country. Whoever can’t produce them themselves is dependent on other states. That’s why the EU, the US, and China are funding Deep Tech with enormous programs, sometimes with sums in the hundreds of billions.

The long road from lab to product

At the beginning there is usually a doctoral thesis or a research project. A process works in the lab, but only once, in a tiny quantity, and under perfect conditions. The real effort begins afterward: the technology has to work reliably, affordably, and in large quantities. Experts call this leap scaling.

This is financed in several rounds. First come grants and small amounts from specialized investors, so-called venture capitalists. These deliberately invest in risky companies because a single hit offsets many failures. Later, when a first factory has to be built, much larger sums are at stake.

The most dangerous phase lies in between and is often called the “valley of death”. Research funding has run out, but there is still no sellable product. Many technically convincing projects fail right here, not because of physics, but due to a lack of money. A common misconception is therefore that a Deep-Tech company usually fails because of the science.

Deep Tech in headlines and everyday life

In business news, the term almost always appears together with funding rounds. Reports like “Deep-Tech startup raises 200 million euros” often concern quantum computing, nuclear fusion, or artificial intelligence companies. Chip manufacturing also counts among these, such as the machines made by the Dutch company ASML.

In everyday life, one encounters the results only with a delay. The lithium-ion battery in a mobile phone was once purely basic research. The mRNA technology behind the Covid vaccines was also developed over decades before it was suddenly needed worldwide. What seems self-evident today was Deep Tech twenty years ago.

As a reader, one critical question is especially worthwhile. Is there a working prototype behind an announcement, or just a presentation for investors? With Deep Tech, spectacular promises and actual progress are often far apart.