DeepTech, or Deep Technology, refers to startups and companies that focus on creating groundbreaking innovations through significant scientific or engineering advancements. Unlike traditional tech startups focusing on software or digital platforms, DeepTech ventures engage in complex R&D to create innovations in fields like biotechnology, AI, quantum computing, and advanced materials. These startups tackle fundamental scientific challenges and often have longer development cycles, but their solutions address major societal issues such as climate change, health crises, and energy shortages. DeepTech typically integrates multiple scientific disciplines, blending fields like biology with computer science.
While both DeepTech and traditional tech startups focus on innovation, their approaches and goals differ significantly. Tech startups typically emphasize digital platforms, mobile applications, and software solutions that can be rapidly scaled with minimal upfront investment. These ventures often prioritize market entry and user acquisition, relying on existing technologies to create value quickly.
In contrast, DeepTech startups pursue disruptive solutions based on the latest scientific discoveries or engineering innovations. This results in longer development timelines, as these ventures are focused on solving highly complex technical challenges. For example, a tech startup might develop an AI-driven mobile app, while a DeepTech company could be advancing AI technology itself, such as developing neural networks that push the boundaries of machine learning.
However, despite its potential, DeepTech faces several significant challenges. Securing early-stage funding is difficult due to the long-term nature of these projects and uncertain returns. Regulatory hurdles in sectors like biotech and energy can also delay market entry. Additionally, attracting specialized talent is competitive, and scaling from prototypes to marketable products involves complex production and supply chain issues. Adoption of disruptive technologies can be slow, requiring changes in established practices. Finally, long development timelines strain resources and investor patience, and building a collaborative ecosystem with universities and industry partners remains challenging.
The European DeepTech sector is rapidly gaining relevance and attracting significant investment. According to a recent study by McKinsey, Europe's share of global DeepTech investments rose from 10% in 2019 to 19% in 2023, marking a substantial increase. DeepTech now constitutes 44% of all tech investments in Europe, up 18 percentage points since 2019. European DeepTech investments have also consistently outperformed traditional tech investments, achieving an average annual return of 16% compared to 10% for traditional tech investments since 2005. Key areas attracting venture capital in European DeepTech include new artificial intelligence (e.g., autonomous systems, explainable AI), future computing (e.g., quantum computing, brain-computer interfaces), new energies (e.g., green hydrogen), space technology (e.g., nanosatellites), robotics (e.g., nanorobotics), biotechnology, foodtech, agtech, defense technology (e.g., cybersecurity), and advanced materials (e.g., green concrete, nanomaterials).
The European Commission, in collaboration with 71 investors, has launched a new initiative called the "Trusted Investor Network" to promote the development of DeepTech in Europe. The investors, which include venture capital funds and public investment banks, collectively manage over €90 billion in assets. The funds are part of the European Innovation Council (EIC) Fund, a component of the EU’s Horizon Europe research and innovation program. The network aims to boost investments and facilitate the exchange of best practices within the DeepTech sector.
The McKinsey report "European Deep Tech- Opportunities and discoveries" shows that the overall risk of failure for DeepTech startups is comparable to that of non-DeepTech startups. The median time to exit for both is 7 years, but DeepTech startups have a slightly higher probability of reaching unicorn status. In Europe, there is a significant opportunity to close the gap with the U.S., particularly in the high-tech sector.
As the DeepTech landscape in Europe continues to evolve, the need for specialized support systems to nurture these startups becomes increasingly critical. This is where accelerators like ExciteLab our new location in Dresden our new location in Dresden, come into play. ExciteLab supports high-tech and DeepTech startups in robotics, sensors, IoT, semiconductors, and quantum technology. It offers tailored acceleration programs for both early-stage and advanced startups, along with recruiting services and access to TU Dresden's research experts. Additionally, ExciteLab partners with corporations to identify trends, foster startup collaborations, and manage innovation risks. Get here to the ExciteLab website to learn more and be up-to-date about the next application deadline.
This article was written in cooperation with Emelie Christiani.