Deep tech is transforming the landscape of venture funding, with emerging technologies now recognized as an established asset class. In this article, we delve into the findings of a new report by Boston Consulting Group (BCG) that explores the rise of deep tech and its impact on the investment landscape. From the increasing share of venture capital funding to the challenges and opportunities for investors, we uncover the key insights that every investor needs to know. Join us as we navigate the world of deep tech and discover the potential it holds for revolutionizing the future of venture funding.
The Rise of Deep Tech in Venture Funding
Explore the increasing prominence of deep tech as an asset class in the world of venture funding.
Deep tech has emerged as a powerful force in the world of venture funding, capturing a stable 20% share of venture capital funding. This represents a significant increase from just a decade ago when it accounted for only 10% of funding. The rise of deep tech signifies a shift in investor interest towards technologies that aim to solve complex global challenges.
According to a recent report by Boston Consulting Group (BCG), deep tech investments have demonstrated similar unweighted internal rates of return compared to traditional venture funds. This suggests that deep tech is now an established asset class, offering lucrative opportunities for investors.
Challenges and Opportunities for Investors
Discover the unique challenges and potential rewards of investing in deep tech.
Investing in deep tech comes with its own set of challenges. These technologies are still in the early stages of development, requiring longer investment horizons and heightened levels of risk compared to other tech investments. The underlying science may still be evolving, and market potential and business plans may be uncertain.
However, the potential rewards for investors in deep tech are significant. Startups in this space have the opportunity to address critical global issues and unlock new markets. The substantial returns realized by deep tech startups can make it a lucrative asset class for investors willing to embrace the risks and exercise patience.
Areas of Impact: Climate, Demographics, Technology, and Security
Explore the four main areas where deep tech investments are making a significant impact.
Deep tech investments are making a substantial impact in four key areas: climate and sustainability, demographics, technology, and security. Within these areas, multiple technologies and use cases are attracting significant funding.
Climate and Sustainability
Deep tech solutions are being developed to address pressing environmental challenges such as climate change and energy sustainability. Technologies like advanced physics and chemistry, digital AI, and autonomous systems are driving innovation in areas such as renewable energy, carbon capture, and sustainable agriculture.
Demographics
Deep tech is also revolutionizing demographics, with technologies that aim to improve healthcare, education, and quality of life. From personalized medicine and telehealth to advanced educational platforms and smart cities, deep tech is reshaping how we live and interact.
Technology
Within the realm of technology, deep tech investments are fueling advancements in areas such as artificial intelligence, robotics, and quantum computing. These technologies have the potential to transform industries and drive innovation in sectors ranging from manufacturing and logistics to finance and cybersecurity.
Security
Deep tech is playing a crucial role in enhancing security measures and safeguarding critical infrastructure. From advanced encryption and cybersecurity solutions to autonomous surveillance systems and threat detection algorithms, deep tech is bolstering our defenses in an increasingly interconnected world.
Global Landscape: Funding and Support
Discover the countries leading the way in deep tech funding and support.
The United States and China are at the forefront of deep tech funding, accounting for over 60% and 12% of the global share, respectively. Europe collectively contributes 14% to the deep tech funding landscape.
However, when considering deep tech funding as a share of GDP, several nations stand out for their commitment to supporting deep tech development. Countries such as Israel, Sweden, Singapore, and the UK are aggressively investing in deep tech, recognizing its potential to drive economic growth and innovation.
Developing a Clear Investment Strategy
Learn how to develop a clear investment strategy for navigating the deep tech landscape.
Investing in deep tech requires a well-defined strategy that prioritizes specific technology segments and builds networks of expertise and partnerships. When developing an investment strategy, several factors should be considered:
- Disruptive Potential: Identify use cases that have the potential to redefine industries and drive significant growth.
- Investment Possibilities: Evaluate the pipeline of available investments and the number of startups operating in the chosen technology segment.
- Time to Value: Assess the maturity of the technology and the remaining technological risks.
- Existing Capabilities: Determine if the fund has the necessary capabilities and resources to leverage in the field, or if additional capabilities need to be developed.
- Ecosystem: Consider the involvement of other players, such as governments and institutions, in the financing and support of deep tech startups.
By carefully considering these factors, investors can navigate the deep tech landscape and position themselves for success in this rapidly evolving field.
