Deep tech

Deep technology (deep tech) or hard tech is a classification of organization, or more typically startup company, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. They present challenges requiring lengthy research and development, and large capital investment before successful commercialization. Their primary risk is technical risk, while market risk is often significantly lower due to the clear potential value of the solution to society. The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce.
The term "deep tech" has been present for decades, representing R&D divisions at major defense and telecommunications corporations such as Raytheon Technologies, Lockheed Martin's Skunk Works, and Bell Labs, to the more modern definition which increasingly includes companies found in the venture capital ecosystem or awardees of the Small Business Innovation Research (SBIR) program, a U.S. government program, coordinated by the Small Business Administration, that provides $2.5 Billion annually to small, U.S.-owned companies who compete for funding to develop and commercialize disruptive technologies. Deep tech doesn't refer to innovation itself, but to a category of startup companies that develop new products based “on scientific discovery or meaningful engineering innovation”.
According to year 2019 research by the Boston Consulting Group and Hello Tomorrow, a French nonprofit that supports deep technology, the most prominent deep tech fields included advanced materials, advanced manufacturing, artificial intelligence, machine learning, biotechnology, blockchain, robotics, photonics, aerospace and space technology, electronics (including semiconductor manufacturing), cyber threat intelligence, fusion power and quantum computing. Global private investment in those fields increased more than 20% a year from 2015, and reached almost $18 billion in 2018. Possible fields for deep tech application include agriculture, life sciences, chemistry, aerospace and green energy. In business context, deep tech has three key attributes: potential for impact, a long time to reach market-ready maturity, and substantial requirement for capital.
The funding for deep tech companies has increased over the years. According to Boston Consulting Group, the total investments in deep tech companies increased from $1.7 billion to $7.9 billion from 2011 through 2016. Investment activities are concentrated in the United States and China that totaled for about 81% of global private investments in deep tech from 2015 through 2018 with approximately $32.8 billion and $14.6 billion invested in each country, respectively. China acts as the main driver in deep tech investments with funding increasing 80% each year over that period compared to 10% each year in the US. European countries are also active in deep tech investing. According to the Financial Times, in 2017 the total funding towards deep tech companies reached around €3 billion across 600 deals.
Corporations such as Google, Facebook, Amazon, IBM and Apple show increased interest towards deep tech applications in AI, virtual reality, drones, self-driving cars. Business accelerators are also shifting focus from digital startups towards deep tech ventures. In 2016 Y Combinator's batch there were 32 deep tech startups including 9 in biotech, 4 in drones and 3 in advanced hardware. The Eindhoven-based startup accelerator HighTechXL exclusively focuses on deep tech ventures. In Japan, the DTSSA (Deep Tech Startup Supporters Association) has also been actively supporting deep tech, helping to accelerate innovation and growth in the country’s deep tech ecosystem.