This is the first in a series of articles highlighting how deep tech—the problem-driven application of advanced technologies to address large-scale issues—can help deliver superior value and growth while enabling companies to achieve their goals. Here we examine why deep tech will almost certainly be part of your company’s future.
For most companies, the question of whether advanced technologies will disrupt their business is a matter of when, not if. A corollary question for incumbents is whether they will be drivers or casualties of the changes these technologies will enable.
There are plenty of reasons why deep tech is starting to make deep inroads. One of the biggest and most immediate is the global push for more-sustainable business practices. We know that in many industries, true sustainability (net-zero emissions, for example) cannot be achieved without the help of new technologies. We also know that moving early as a new technology trend emerges can create enormous value (witness Tesla taking on electric vehicles or Pfizer, BioNTech, and Moderna investing in RNA vaccines).
As our colleagues recently pointed out in Fortune, the number of startups disrupting the long-standing competitive advantage conferred by scale is growing fast. Backed by the rapid growth of high-risk venture capital funding, small companies often win by focusing on solving critical, large-scale problems and exploiting a combination of maturing digital technologies (such as AI and cloud computing) and emerging physical technologies (synthetic biology and architected materials, for example). This convergence is the essence of deep tech innovation.
Little surprise then that a growing number of big-name venture capital investors are shifting their focus from software to deep tech, attracted by the prospect of solving the biggest challenges facing the world while making money doing it.
BCG and Hello Tomorrow have estimated that venture capital funding for deep tech startups increased from $15 billion in 2016 to more than $60 billion in 2020. In the first eight months of 2021, venture funds put $77.5 billion to work in advanced tech startups, according to MIT’s venture firm, The Engine.