Photo credit: Chris Ried, Unsplash
Climate change, food scarcity, and alternative energy are just a few of the biggest issues we are facing as a society. While no one solution is going to fix any of them, one industry is using technology to address these problems.
Deep tech, technology rooted in scientific research, seeks to solve issues such as societal and environmental concerns, with solutions instead of end-products. These technologies, such as AI, facial recognition, biofuels, or robotics, are game-changing and disrupt the way we use tools across industries.
What categorizes a company as deep tech? We interviewed an expert on the subject, Xavier Lazarus, partner and co-founder of Elaia, a European digital deep tech VC, to understand more about the deep tech world and where these technologies might take us.
How would you define deep tech?
“The term deep tech is used a lot nowadays, and isn’t well-defined,” said Xavier Lazarus.
“At Elaia, we have an internal definition in order to qualify a company as deep tech. They must have one of three criteria. The company must be either a spin-off from academic research, be founded by someone who was a former researcher, or has come from the market, but has established a strategic partnership with academic research to build on their solution.”
“If you have one of those criteria, we qualify the company as deep tech. And we can always intensify the R&D of a company if it looks like they are working on a deep tech topic, but don’t have research in place.”
Why does Elaia invest primarily in deep tech startups?
“It is in our DNA. I spent 9 years teaching and researching abstract math then moved to the VC industry, being an entrepreneur for a short time in between. But this gave me the sense that there was something important to take from the research world.
“At Elaia, we believe that the challenges that we are facing like the digitization of the world, climate change, or health issues can be solved by doing difficult things based on human knowledge and frontier knowledge. There is a lot of value to be created by backing research-based or research-linked companies.
“Also, we started in Paris, the center of the world for starting a fashion brand or a wine or cheese business, but not quite the center of the technology world. That’s Silicon Valley or China where the usage is defined. We found that the strengths of the country are more in education and the skills of the people. Therefore, Europe had a better chance at competing in deep tech than in regular tech.
“The majority of our investments are in software, AI, blockchain, and quantum computing, and we are now expanding to biotech, life sciences, and energy.”
What are the business opportunities for deep tech in 2023?
“For the past few years, we’ve noticed a huge need in healthcare for medical devices and drug discovery, especially related to data and AI. Also, everything linked to digital and life sciences is becoming big and we are heavily investing in that.
“Cybersecurity, which 10 years ago was considered only an engineering subject, has been getting more involved in deep tech. In 2017, we saw a big part of deep tech added to the field – one of the biggest algorithms ever built – and thought it would be good enough forever. Yet between the advances in quantum computing and AI, it is not enough. Things like cloud immigration or personal devices need to be addressed with deep tech.
“We are also seeing some interesting things happening in the industry of information. There are a lot more investments in microbiology and biotech companies that are using a new generation of concepts to speed up the cycle and create new ideas.”
What about in 10 years?
“What will be interesting to see are the trends in biotech and industry. These are starting to become platforms themselves, which are either labs or silica-based approaches, and could shorten the cycle between studying the science behind an idea and proving that it could be a viable company. This is something that deep tech is getting better at, shortening the cycles before going to market.
“It will be very interesting to see the progress that deep tech startups will make towards quicker market access. We will see a wave of new companies that are capitalizing on the fact that they can act on their ideas quicker and be more efficient in euros spent.”
Outlook on the industry
With the number of investments in deep tech startups growing, research and development in the sector are becoming more robust. These startups are tackling huge societal problems, but there is strength in numbers. Venture Capitalists like Elaia are helping these startups find their voice and their market.
Xavier Lazarus, Partner at Elaia. Photo credit: Elaia