The Golden Age of Deep Tech

🌈 Abstract

The article discusses the rise of the "Golden Age of Deep Tech", where building deep tech companies (e.g. in robotics, space, biotech) has become easier and more affordable than ever before. It outlines several key reasons for this:

1. Stronger startup talent with relevant industry experience is now more available.
2. Technological advancements have led to dramatic improvements in the cost, size, and performance of key hardware and biotech components.
3. There is more venture capital and non-dilutive funding available for deep tech startups.
4. Macro trends like geopolitical tensions and the need for automation are creating strong demand tailwinds for deep tech innovations.

🙋 Q&A

[01] Stronger Startup Talent

1. What are some examples of companies that have produced alumni who are now available as co-founders, advisors, and employees for deep tech startups?

• The article mentions alumni from companies like SpaceX, Palantir, Solugen, and Anduril as being available to staff deep tech startups.

2. How does the availability of these experienced startup people benefit deep tech companies?

• It allows deep tech companies to learn from recent playbooks that have worked, rather than having to reinvent every wheel themselves.
• It makes it easier to recruit a team of ambitious engineers who can build complex hardware+software products at startup speeds.

[02] Improved Tech Infrastructure

1. What are some examples of technologies that have advanced dramatically in the past 15-20 years?

• Solar panels are 10x cheaper per watt and 1.5x-2x more efficient.
• Lithium-ion batteries are 10x cheaper and 10x more energy dense.
• LiDAR is about 100x cheaper.
• Genome sequencing is 100,000x cheaper and gene synthesis is 100x cheaper.
• Launching a kilogram into space is 10x cheaper.
• Industrial robots are 100x more precise than 40 years ago and 5x cheaper than 20 years ago.
• Hard drives and RAM are each 40x cheaper and much higher capacity.

2. How has this advancement in underlying technologies impacted the cost and feasibility of building deep tech companies?

• A typical deep tech company might have needed tens of millions of dollars to prove out something meaningful 20 years ago, single digit millions 10 years ago, and only hundreds of thousands today.
• Many amazing deep tech startups today couldn't have been built until the last few years, but now founders can build compelling proof-of-concept hardware with a pre-seed or seed round.

[03] Better Access to Funding

1. What types of venture capital funds are now investing heavily in deep tech companies?

• Large funds like DCVC, Lux, and Eclipse have invested billions into deep tech companies over the past decade.
• There are also great seed stage funds like Root Ventures, Fifty Years, and Cantos, as well as emerging funds like Humba Ventures, Champion Hill, Julian Capital, Also Capital, and Undeterred Capital.

2. What types of non-dilutive funding sources are now available to deep tech startups?

• Government programs like SBIR grants, AFWERX, STRATFI/TACFI matching funding, and the DIU.
• Incentives in the Inflation Reduction Act and grants/loans from the Department of Energy for startups in areas like climate and energy.

3. How do these non-dilutive funding sources benefit deep tech startups?

• They help keep dilution at bay by providing cash without requiring equity.
• They also provide early access to customers, like government departments, which is invaluable for customer development.

[04] Macro Tailwinds

1. What are some of the global trends creating demand for deep tech innovations?

• Tensions with China and Russia have created pressure to fund defense innovation.
• Strained relations with China are causing companies to rethink their material sourcing and manufacturing.
• Rising minimum wage laws and seasonal hiring needs are pushing industries toward increased automation.

2. How are these macro trends benefiting deep tech startups?

• They are creating a lot of new buyers who had zero desire to try anything new 5-10 years ago, but are now desperately searching for alternatives.
• This provides an amazing opportunity for deep tech startups that can listen to their customers and build solutions quickly.