An article on Crunchbase News reports that deep tech investments were down 38% in 2023 compared to the previous year, as investors pulled back funding in a market where cash is becoming more expensive and liquidity options are drying up. However, the article also highlights that funding for some of the biggest sectors in deep tech, such as quantum computing, space travel, and robotics, only dropped 24% in 2023. Despite the slowdown in investing, the wide breadth of deep tech and the importance of the problems it aims to solve have kept money flowing.
The article further notes that deep tech became attractive to many founders and investors after the COVID-19 pandemic highlighted vulnerabilities in various sectors. While some areas of deep tech, such as certain verticals of AI and quantum computing, are overfunded, sustainability and cleantech have seen renewed focus. Companies focused on sustainable consumer goods, energy, and manufacturing are attracting interest, as are technologies related to clean capture of carbon, hydrogen, and ammonia gases.
The article also highlights the role of artificial intelligence (AI) in deep tech ventures. Some investors are looking to apply AI to hard tech spaces for the next generation of innovation in those industries. Deep tech companies are collecting unique and proprietary datasets to push AI forward in certain areas. The increasing interest from corporations and their venture capital arms is also driving investment in deep tech. Corporations are realizing that it is often more efficient to buy, rather than build, deep tech solutions. The article mentions the example of U.S. oil and gas producer Occidental Petroleum purchasing deep-climate tech startup Carbon Engineering for $1.1 billion in 2023 to develop carbon-capture sites.
Despite the downturn in funding, the article suggests that this may not be a bad thing for deep tech. Deep tech can be complex to invest in and understand, given its high level of science and engineering. The article notes that specialists in the field are necessary and specialization can be difficult. While some investors who entered the space during the high-spending days of 2021 have left and returned to other areas, the article emphasizes that deep tech investments still have potential and the wide range of sectors in deep tech means that there are always new opportunities for investment.
