What is the Difference between Deep Tech and Tech?

“Deep technology” or “deep tech” is a phrase that has been thrown around quite recently without having a definitive answer. Deep tech, as most people know it, covers products like AI, robotics, supercomputers, and quantum technology. The phrase was coined in 2014 by Propel(X) CEO Swati Chatrivedi, when she discussed the rise in deep tech start-ups. But why does there need to be a phrase separating this sector? As the article discusses below, there are some important differences between deep tech and tech, as well as important implications for the venture capital within the deep tech sector. These differences also affect how people will use this technology in the future.

Deep Tech is a Subset of Tech with Bigger Goals

Thanks to the rise of big data companies like Google or Amazon, more focus has been placed on the deep tech industry. Deep tech is a subset within the technology sector, but unlike most of the rest of the sector, deep tech looks to fulfill bigger goals. Deep tech has been classified by its vision to address larger societal issues and opportunities, such as climate change, food shortages, and alternative energy. This means that venture capitalists are not investing in an end-product for a user, but a future solution. Because of this, deep tech has, and will continue to become, more socially relevant. Especially with looming issues like climate change, solutions that deep tech can provide may not only be beneficial but also necessary.

Deep Tech is “the New Black”

Most deep tech uses the combination of software and hardware to make beneficial products and solutions. From AI healthcare diagnoses to VR education, deep tech is beginning to expand our knowledge and resources. According to a 2021 Creative Ventures article, the reason deep tech is becoming such a hot topic is due to the “staleness” of software development. As software development, like Microsoft, peaked 10-30 years ago, it has since become somewhat “old hat” for venture capitalists to invest in. As deep tech combines software and hardware, it has become much more exciting and offers new possibilities for investors. Even though some deep tech (like VR) has been around for decades, the sector is growing significantly in funding and popularity.

Deep Tech Requires Different Skills

Because deep tech is much more niche, it needs individuals with more technical skills. Usually, these employees have an engineering or computer science background as opposed to a business degree. Due to more technical expertise, the hiring pool for deep tech business has shrunk significantly, and even become constraining in some fields. For example, many quantum technology businesses are finding it difficult to hire employees due to the necessary skills required for the job.

Deep Tech has a Different Timeline and Business Model

As deep tech is more focused on solutions for large problems and not on end-products, it has a much longer timeline. This requires a different business model for most deep tech companies, one with more forethought into which product market to target. This is because most deep tech companies cannot pivot as easily compared to other tech companies, so a longer and more thorough business plan is needed in order to produce successful margins.

What Do These Differences Actually Mean?

When it comes to investors and consumers of tech, these differences have strong implications. For investors, there is a longer time for ROI, and much more capital needed upfront for a deep tech business compared to other tech companies. For consumers, some deep tech (like AI and VR) is already being commercialized, but big advancements most likely will not be accepted until ten or twenty years from now. For all of society: the sector of deep tech is just getting started.

References:

BBVA. 2017. “What Is ‘Deep Tech’? | BBVA.” NEWS BBVA. November 28, 2017.

Lunden, Ingrid. 2020. “What Do We Mean When We Talk about Deep Tech?” TechCrunch. March 11, 2020.

Wang, James. 2021. “How Does a Deep Tech Startup Differ from a ‘Normal’ Startup?” Creative Ventures. September 30, 2021.

Wright, Shona. 2021. “How Can We Define Deep Tech?” TechSPARK.co. April 1, 2021.