Coined in 2014 by Indian investor and entrepreneur Swati Chaturvedi, the time period “deep tech” refers to elementary discoveries in science and engineering improvements that supply important advances over present applied sciences.
Usually, startups in the deep tech area have a tendency to focus on transformative applied sciences equivalent to synthetic intelligence (AI), robotics, blockchain, biotechnology, and quantum computing, with the potential to reinvent the wheel throughout numerous industries.
Corporations like Intel, Microsoft, and Apple could be seen as precursors to at this time’s deep tech startups — Intel pioneered the silicon revolution, Microsoft reworked the software program trade, and Apple disrupted the smartphone trade. Lately, corporations like SpaceX, aiming for interplanetary colonisation, and DeepMind, are taking on the mantle by pushing the boundaries of AI.
Aside from massive names like SpaceX and DeepMind, many deep tech startups usually battle relating to commercialising their improvements.
It is because they undergo a totally different evolution cycle as in comparison with the everyday B2B or B2C firm — commercialisation usually tends to be extra advanced and founders are sometimes offered with distinctive challenges alongside the way in which. However what makes this journey to success for deep tech startups so difficult?
An answer in search of an issue
Usually, the event of deep tech startups is deeply tied to the buildup of analysis carried out at universities and analysis institutes. These ventures are normally spin-offs from universities, searching for to resolve real-world issues and commercialise the establishment’s novel expertise or Mental Property (IP).
In stark distinction, most standard startups determine pre-existing market issues after which craft options designed to seamlessly deal with these challenges. In different phrases, they possess a transparent understanding of the issue they intend to resolve from the outset.
By taking an reverse method, these deep tech entrepreneurs typically undergo from SISP (an answer in search of an issue), a time period coined by Y Combinator, as they zealously pursue the best downside that completely aligns with their cutting-edge options.
Nevertheless, most of the time, founders try to shoehorn an issue into their answer, which may hinder an organization’s development prospects. That mentioned, it’s not inconceivable for corporations to develop this manner, however it’s an extremely inefficient approach to take action.
Take the invention of laser, as an illustration. When the tech was first invented again in the 1960s by Theodore Maiman, it was dubbed as “an answer in search of an issue”.
It wasn’t instantly apparent what a coherent supply of mild was actually for — however after years of analysis, lasers now make up an integral half of numerous industries, from healthcare to manufacturing.
Excessive danger, excessive returns
Even when a deep tech enterprise identifies a real-world downside that its IP can remedy, taking these novel applied sciences from lab to market requires substantial capital to assist their commercialisation — from constructing factories to assist hardware-centric applied sciences and buying extremely refined, costly tools and lab areas to acquiring regulatory approvals, simply to call just a few.
Since most deep tech corporations are constructed round a basically new and unproven expertise, they carry the next danger as in comparison with common ventures. These improvements are probably examined in a lab or analysis centre, and early outcomes typically don’t present a assure for scalability and success as these outcomes are derived in a managed atmosphere.
Consequentially, many deep tech founders are more likely to face challenges whereas constructing their merchandise — the expertise danger won’t be eradicated till later in the method, rising the chance of the enterprise’s failure.
Cultivated meat startup Shiok Meats, which was as soon as touted as one of Singapore’s rising meals tech startups, confronted related points.
In reality, its co-founder, Sandhya Sriram, admitted in a prolonged LinkedIn put up that 90 per cent of the corporate’s experiments cultivating seafood find yourself failing because it struggled with scalability. Since its inception in 2018, the startup has but to have the ability to efficiently scale crustacean stem cells into manufacturing.
The problems and uncertainties that may come up in scientific R&D for these deep tech startups may also be a push issue for buyers, inflicting them to be extra cautious about funding these ventures.
Consequently, a funding hole known as the “valley of demise” arises, presenting a singular monetary problem for entrepreneurs between analysis invention and commercialisation.
Nevertheless, if a deep tech startup can overcome the “valley of demise”, it may ship outsized returns over a mean enterprise funding. Microsoft, Nvidia, and Google had been all deep tech startups in the start — these corporations required larger capital and carried larger dangers, however at this time, they stand as prime examples of the outstanding success deep tech startups can obtain.
Singapore lacks enterprise constructing abilities
Along with these challenges, the supply of expertise — each in phrases of enterprise constructing and technical experience — performs a pivotal position in the profitable commercialisation of the novel applied sciences produced by deep tech startups.
Enterprise constructing abilities can develop and propel a startup to success, whereas technical abilities give attention to the nitty-gritty, working the behind-the-scenes and driving innovation in deep tech startups. These abilities complement one another, in the end main a enterprise to larger heights.
Nevertheless, because the world faces a worldwide expertise shortfall, the shortage of these abilities is more and more changing into a serious ache level for deep tech startups throughout the globe. By 2030, there will probably be a worldwide human expertise scarcity of greater than 85 million individuals — if left unchecked, this expertise scarcity may outcome in about US$8.5 trillion in unrealised annual revenues.
This shortfall is very pronounced in Singapore, given the city-state’s small inhabitants. In reality, Singapore is ranked because the third-most “talent-starved” nation amongst 40 international locations, with 84 per cent of the city-state’s corporations reporting shortages.
Even for international locations the place expertise shortages usually are not as obvious, scaling a deep tech startup is difficult sufficient as it’s. Take Stanford College, the highest producer of startup founders, for example.
At an MOU signing between Temasek, the Nationwide College of Singapore (NUS) and Nanyang Technological College (NTU), Professor Ho Teck Hua, the President of NTU, revealed that Stanford College has about 13,500 innovations and disclosures over a 50-year interval.
Of the 13,500 innovations, just one in 5 generate cash, and just one in 100 have an opportunity to generate a income of US$1 million or larger. As a complete, solely three have managed to generate a income of greater than US$100 million, and one of these startups is Google.
However, whereas Singapore has an unlimited quantity of improvements — with NTU and NUS having a mixed quantity of 4,000 innovations and disclosures — the city-state usually lacks enterprise constructing expertise.
Think about a professor like me. I don’t know the right way to [build] a enterprise, I need to be nerdy and techy. We [professors] are horrible at constructing ventures.
– Professor Ho Teck Hua, President of NTU
Again in November final yr, expertise investor Entrepreneur First (EF), which builds deep tech startups from scratch by matching aspiring entrepreneurs with one another, pulled out of Singapore after citing a scarcity of deep tech expertise throughout the city-state.
In response to Tech in Asia, an entrepreneur who was half of EF’s earlier batches mentioned that the corporate was making an attempt to get 50 to 100 members in its 12th cohort, however by that point, it had already “exhausted all the nice founders in a tiny nation.”
Singapore’s efforts to bolster the deep tech ecosystem
Recognising the ache factors of deep tech startups throughout the city-state, Singapore has frequently invested in constructing its analysis and innovation ecosystem by means of a collection of nationwide R&D plans because the 1990s.
Again in 2016, the city-state launched SGInnovate to catalyse and appeal to funding for early-stage deep tech investments. By SGInnovate, founders of deep tech startups can entry a plethora of assets and faucet right into a a worldwide pool of abilities to bolster their startups.
Other than this, underneath the S$25 billion Analysis, Innovation, and Enterprise (RIE) 2025 plan, Temasek will probably be pumping S$1 billion a yr into funding the event of deep-tech innovation throughout a spread of domains.
To additional speed up the creation of deep tech startups from NUS and NTU’s pipeline of analysis, Temasek, NUS and NTU have additionally not too long ago signed an MOU to collectively commit S$75 million in a pilot programme.
Throughout a speech on the launch of the SGInnovate Deep Tech Expertise Central earlier this yr, DPM Heng Swee Keat shared that deep tech holds nice promise in fixing humanity’s largest challenges and enhancing lives.
Thus far, Singapore’s dedication to deep tech has paid off, particularly through the pandemic because the city-state was capable of faucet on its experience in biomedical sciences to rapidly develop diagnostic check kits.
The COVID-19 pandemic has strengthened our conviction in investing in innovation and deep tech. Deep tech will play a good larger future position in addressing the numerous world challenges, together with Illness X (the subsequent massive virus outbreak), local weather change and ageing.
– DPM Heng Swee Keat
As we glance forward, it’s clear that Singapore’s continued funding in innovation and deep tech will probably be pivotal in addressing future world challenges. With its dedication to fostering expertise and pioneering options, Singapore stands poised to paved the way in shaping a brighter and extra technologically superior future for us all.
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