Deep technology or deep tech deals with those startups whose business model is based on high-tech innovation in artificial intelligence, engineering or significant scientific advances.
For deep tech, the business starts around accurate, innovative technology to solve almost big problems in the real world. Deep tech startups will be based on machine learning, artificial intelligence, or other coming-of-age applications like computer imaging, VR, and blockchain.
The term deep tech is used to set it apart from its opposite, “shallow tech”. Compared to deep tech, shallow tech involves converting a business from a non-digital model to a digital one.
Shallow tech advances are easier to replicate for competitors and don’t disrupt the market much. For example, a telephone-based delivery service now available in digital fashion through
a bookshop or a phone app for digital download would be an example of shallow tech.
Examples of deep tech are artificial intelligence applied to predict molecular imaging technologies or natural disasters or predisposition to a disease or identify disease before any other test could.
The deep tech field includes blockchain, biotechnology, robotics, AI, advanced materials, quantum computing, and photonics are racing from early research to market applications. In a nutshell, it’s a new industrial revolution where infrastructures and new platform technologies change how we work and live.
Deep tech can advance broad industries and lessen or solve problems like dealing with ageing populations, solve or reduce world problems like global warming, diseases or feeding a growing global population. This is similar to how things changed with the last wave of new platform technologies such as mobile phones, the internet, silicon chips, and PCs.
In recent years, DNA sequencing, computer-aided design, and 3D printing, including test and prototype stages, have become more accessible and faster. Therefore, these profound tech platforms’ rapid advancement will lead them to enter the market.
India has some tremendous deep-tech startups working across a range of emerging technologies. Still, only a few per cent of total technology-related funding is going to deep tech.
Deep tech startups require extensive research and significant investment over a longer time. Venture capital companies invest in disruptive technologies, but commercial success can take longer as it requires a longer time to achieve market adoption.
Countries like the United States and China are prioritizing their funds for the deep tech startup ecosystem as the sector drives innovation for their country. The deep tech startup ecosystem differs from the tech startup ecosystem as their cycle differs.
Investors and venture capitalists should understand that a deep tech startup takes longer to reach the product market space because more time is required to spend on research and innovation.
The good news is it’s difficult for competitors to replicate what they’ve done when they do get to market. They’ll make other businesses irrelevant and rewrite the rules. A prime example would be a fintech company using blockchain to improve clients’ security and authorize them to bank from their phones globally with low overheads.
Interestingly, it is only sometimes vital for the market to run in billions for an investment to make sense. Most venture capital firms evaluate deep tech startup firms based on different parameters to ensure they grow into successful companies.
The probability of demand for the product remains a concern for venture capital in Canada, India, and other countries investing in deep tech. Usually, deep technology companies do not carry a higher market risk. The goal remains to maximize sustained profitability rather than to maximize the addressable market.
Deep technology carries competitor risk with the possibility of the competition cornering the market. The reason remains due to more than one approach to solving a problem. E.g.,
Many people are attempting therapies for cancer and energy storage technologies.
Deep technology companies carry competitor risk — the chance that much of the market will be cornered by competition.
Deep tech startups are based on breakthrough technologies, making them carry significant technology risks. For instance, a new drug may or may not perform well in clinical trials; a highly efficient battery system may or may not function as predicted at scale or an AI system that learns a natural language may not learn at planned speeds.
Intellectual Property Risk
Deep tech startups are based on patents and such. Intellectual property is valuable, but many ways exist to solve the same problem. In some therapeutic cases, patents are vital and require expert scrutiny. In the case of patents, it allows you a 2-year head start. However, for angel investing purposes or venture capital firms, it is helpful to read the claims carefully.
Many venture capital Canada firms like JC Team Capital have successfully invested in startups with great potential. Omni by Virtuix is a virtual reality-based startup that allows a real-life gaming experience. Aero-Sense is tech-based and provides cutting-edge advancements in technologies and solutions for Unmanned Systems, Artificial Intelligence, and Robotics.
Venture capital firm JC Team Capital invests in Canadian startups in series funding rounds and seed funding. Their domain is seed and series funding for startups and rapidly-growing companies, capital investment, small business funding, and angel investment.
Visit jcteamcapital.com for more information regarding Venture Capitalist.