Deep technology (deep tech) or hard tech is a classification of organization, or more typically

startup company A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend ...

, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. They present challenges requiring lengthy

research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving existi ...

, and large capital investment before successful commercialization. Their primary risk is technical risk, while

market risk Market risk is the risk of losses in positions arising from movements in market variables like prices and volatility. There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most ...

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 Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...

and are hard to reproduce.

Definition

The term deep tech has been present for decades, representing R&D divisions at major defense and telecommunications corporations such as

Raytheon Technologies Raytheon Technologies Corporation is an American multinational aerospace and defense conglomerate headquartered in Arlington, Virginia. It is one of the largest aerospace and defense manufacturers in the world by revenue and market capitaliza ...

, Lockheed Martin's

Skunk Works Skunk Works is an official pseudonym for Lockheed Martin's Advanced Development Programs (ADP), formerly called Lockheed Advanced Development Projects. It is responsible for a number of aircraft designs, beginning with the P-38 Lightning in ...

, and

Bell Labs Nokia Bell Labs, originally named Bell Telephone Laboratories (1925–1984), then AT&T Bell Laboratories (1984–1996) and Bell Labs Innovations (1996–2007), is an American industrial research and scientific development company owned by mul ...

, to the more modern definition which increasingly includes companies found in the

venture capital Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which h ...

ecosystem. The word doesn't refer to

innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed enti ...

itself, but to a category of

startup companies A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...

that develop new products based “on

scientific discovery Discovery is the act of detecting something new, or something previously unrecognized as meaningful. With reference to sciences and academic disciplines, discovery is the observation of new phenomena, new actions, or new events and providing ne ...

or meaningful engineering innovation”. According to year 2019 research by the

Boston Consulting Group Boston Consulting Group, Inc. (BCG) is an American global management consulting firm founded in 1963 and headquartered in Boston, Massachusetts. It is one of the Big Three (or MBB, the world’s three largest management consulting firms by re ...

and Hello Tomorrow, a

French French (french: français(e), link=no) may refer to: * Something of, from, or related to France ** French language, which originated in France, and its various dialects and accents ** French people, a nation and ethnic group identified with Franc ...

nonprofit that supports deep technology, the most prominent deep tech fields included

advanced materials ''Advanced Materials'' is a weekly peer-reviewed scientific journal covering materials science. It includes communications, reviews, and feature articles on topics in chemistry, physics, nanotechnology, ceramics, metallurgy, and biomaterial ...

advanced manufacturing Advanced manufacturing is the use of innovative technology to improve products or processes, with the relevant technology being described as advanced, innovative or cutting edge. Advanced manufacturing industries increasingly integrate new innov ...

artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech ...

biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used ...

blockchain A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, ...

robotics Robotics is an interdisciplinary branch of computer science and engineering. Robotics involves design, construction, operation, and use of robots. The goal of robotics is to design machines that can help and assist humans. Robotics integrat ...

photonics Photonics is a branch of optics that involves the application of generation, detection, and manipulation of light in form of photons through emission, transmission, modulation, signal processing, switching, amplification, and sensing. Though ...

electronics The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronics uses active devices to control electron flow by amplification ...

, and

quantum computing Quantum computing is a type of computation whose operations can harness the phenomena of quantum mechanics, such as superposition, interference, and entanglement. Devices that perform quantum computations are known as quantum computers. Though ...

. Global

private Private or privates may refer to: Music * " In Private", by Dusty Springfield from the 1990 album ''Reputation'' * Private (band), a Denmark-based band * "Private" (Ryōko Hirosue song), from the 1999 album ''Private'', written and also recorde ...

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 Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people ...

life sciences This list of life sciences comprises the branches of science that involve the scientific study of life – such as microorganisms, plants, and animals including human beings. This science is one of the two major branches of natural science, th ...

chemistry Chemistry is the scientific study of the properties and behavior of matter. It is a natural science that covers the elements that make up matter to the compounds made of atoms, molecules and ions: their composition, structure, proper ...

aerospace Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial and military applications. Aerospace engineering consists of aeronautics and ast ...

and

green energy Energy is sustainable if it "meets the needs of the present without compromising the ability of future generations to meet their own needs". Most definitions of sustainable energy include considerations of environmental aspects such as greenh ...

. 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. * Deep tech innovations are often radical and may create new markets or disrupt existing ones. Deep tech companies often address big societal and environmental challenges and have potential to impact

everyday life Everyday life, daily life or routine life comprises the ways in which people typically act, think, and feel on a daily basis. Everyday life may be described as mundane, routine, natural, habitual, or normal. Human diurnality means most peo ...

Silicon chips An integrated circuit or monolithic integrated circuit (also referred to as an IC, a chip, or a microchip) is a set of electronic circuits on one small flat piece (or "chip") of semiconductor material, usually silicon. Large numbers of tin ...

are an example of innovation that enabled calculation at previously unimaginable speed and scale. * The time required to move from

basic science Basic research, also called pure research or fundamental research, is a type of scientific research with the aim of improving scientific theories for better understanding and prediction of natural or other phenomena. In contrast, applied researc ...

to applicable technology in deep tech exceed the development time of startups based on widely available technology ("shallow tech" such as

mobile apps A mobile application or app is a computer program or software application designed to run on a mobile device such as a phone, tablet, or watch. Mobile applications often stand in contrast to desktop applications which are designed to run on des ...

websites A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and Wiki ...

, and

e-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manag ...

services). For instance, the development of technology behind

took decades, and now AI companies are rapidly developing in many fields. According to Hello Tomorrow, as of 2019 it took an average of four years to reach market in

biotech Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used ...

and 2.4 years in

. * The demand for huge early-stage funding for R&D and prototype development and lengthy

life cycle Life cycle, life-cycle, or lifecycle may refer to: Science and academia *Biological life cycle, the sequence of life stages that an organism undergoes from birth to reproduction ending with the production of the offspring * Life-cycle hypothesis ...

of deep tech startups forces them to abandon the established funding progression from friends and family to

angel In various theistic religious traditions an angel is a supernatural spiritual being who serves God. Abrahamic religions often depict angels as benevolent celestial intermediaries between God (or Heaven) and humanity. Other roles ...

and

seed money Seed money, sometimes known as seed funding or seed capital, is a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company. The term ''seed'' ...

series A A series A round (also known as series A financing or series A investment) is the name typically given to a company's first significant round of venture capital financing. The name refers to the class of preferred stock sold to investors in exc ...

and subsequent rounds leading to

trade sale A trade sale is a common means of exit to a trade buyer. This allows the management to withdraw from the business and may open up the prospect of collaboration on larger projects. The term trade sale is mostly used in the context of venture capital ...

or IPO.

History

The funding for deep tech companies has increased over the years. According to

, 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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

and

China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...

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 The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...

, in 2017 the total funding towards deep tech companies reached around €3 billion across 600 deals. Corporations such as

Google Google LLC () is an American Multinational corporation, multinational technology company focusing on Search Engine, search engine technology, online advertising, cloud computing, software, computer software, quantum computing, e-commerce, ar ...

Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dust ...

Amazon Amazon most often refers to: * Amazons, a tribe of female warriors in Greek mythology * Amazon rainforest, a rainforest covering most of the Amazon basin * Amazon River, in South America * Amazon (company), an American multinational technolog ...

, IBM and

Apple An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus '' Malus''. The tree originated in Central Asia, where its wild ancest ...

show increased interest towards deep tech applications in AI,

virtual reality Virtual reality (VR) is a simulated experience that employs pose tracking and 3D near-eye displays to give the user an immersive feel of a virtual world. Applications of virtual reality include entertainment (particularly video games), edu ...

, drones,

self-driving car A self-driving car, also known as an autonomous car, driver-less car, or robotic car (robo-car), is a car that is capable of traveling without human input.Xie, S.; Hu, J.; Bhowmick, P.; Ding, Z.; Arvin, F.,Distributed Motion Planning for S ...

Business accelerators Business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services starting with management training and office space and ending with venture cap ...

are also shifting focus from digital startups towards deep tech ventures. In 2016

Y Combinator Y Combinator (YC) is an American technology startup accelerator launched in March 2005. It has been used to launch more than 3,000 companies, including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, St ...

'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 HighTechXL is a deep-tech venture builder, located in Eindhoven, the Netherlands. HighTechXL was established in 2014-15 on the High Tech Campus Eindhoven. HighTechXL is supported by the Eindhoven Startup Alliance, a dedicated partnership includin ...

exclusively focuses on deep tech ventures.

References

{{Reflist, 2 Entrepreneurship Types of business entity

Definition

History

See also

References