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What is deep tech and why does it matter?

Rooting in the constant advances of cutting-edge science and technology, a new wave of innovation is on its way to engulf us: deep tech innovation. Deep tech has the potential to make meaningful changes to society and help us solve several global crisis situations, such as climate change, pollution and socioeconomic inequality.

Although the Netherlands are a major player in the arena of global scientific research (especially if you look at fields of expertise like water management, engineering, food and agrotechnology), the country is currently lagging behind in total deep tech investment compared to other European startup ecosystems. This article will explore what deep tech actually entails, where potential chances lie, and what the benefits of investing in deep technology are.

What is deep tech?

Deep technology (often referred to in shortened form as deep tech) is the classification that is used to describe knowledge-intensive companies, in most cases startups, in the academic world that leverage new and advanced technologies. Their business models and unique selling points are based on high-tech engineering or significant and relatively novel scientific advances. The business starts with and circles around some sort of real innovative technology.

This makes deep tech the opposite of so-called shallow tech, a term that is reserved for a relatively simple technological advance that moves a business from a non-digital business model to a predominantly digital one. Advances in shallow tech are relatively easy to copy for competitors because they often merely leverage and improve existing concepts (Uber and the shared economy are a good example).

Deep tech startups on the other hand have a high potential to revolutionize industries because they add innovative applications or technology to new or existing solutions. This means that deep tech tends to be a game changer rather than just a trend follower. Deep tech startups often spend years in labs and other research environments before they bring their ideas, services and products to the (consumer) market.

This is why they often need significant investments over a longer term, combined with good amounts of solid research. Since deep tech is often disruptive, it tends to take a while before it is broadly adopted. However, once the breakthrough is made, it is generally tough for competitors to replicate deep tech solutions. This means that deep tech often rewrites business rules and makes other companies or older technologies largely irrelevant or even completely obsolete.

Technologies and industries

Now that we know what deep tech is, it is time to look at the industries and subsets of technology in which deep tech is prevalent.

Knowledge-intensive industries

Deep technology is generally concentrated in knowledge-intensive and highly technical industries that hold innovation in high regard. That’s why many deep tech companies are working in areas such as aerospace, agriculture, biotechnology, life sciences, chemistry, cybersecurity, robotics, and sustainable energy and clean technologies.

Which technologies are deep?

Deep technology can be divided into two main clusters that complement (research in one cluster generally contributes to breakthroughs in the other) each other: hardware and software. Technologies in the software cluster require less time to market compared to those within the hardware cluster.

Current competitive areas within the deep tech landscape are artificial intelligence, data science, the Internet of Things, robotics, advanced materials, nanotechnology, quantum technology, blockchain, phonics, and augmented and virtual reality.

Deep tech challenges

Despite the enormous potential that deep tech harbors, there are still a lot of challenges. Not all activities surrounding deep tech receive enough funding, leading to missed opportunities. This is especially true in health tech, where startups generally have longer runways because of strict testing and regulation requirements.

In the field of climate tech, companies often fail to form a cohesive ecosystem, whilst initiatives in this field also often face barriers when it comes to disrupting existing and well-established energy systems. A close collaboration between universities, knowledge institutions, startup hubs, incubators, governments and investors is needed to really reap the benefits of deep tech.

The future of deep tech

The rise of deep tech can be seen as a new industrial revolution that has the power to change the way in which we live and work. Helped by 3D-printing, DNA sequencing and computer-aided design, a growing number of deep tech fields is also moving more quickly from early research to market applications. This greatly enhances the capabilities that deep tech offers to solve complex (world) problems like global warming, disease, feeding an ever bigger global population, and dealing with aging populations. It seems that the future of deep tech looks pretty bright.