Deep tech is risky, capital intensive, and has lower returns…
It’s a narrative we hear all the time, but… does the data support these myths?
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Since 2003, deep tech investments have delivered a 16% IRR, outperforming traditional tech at just 10%.
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While the initial risks for deep tech are higher, which is usually the case for disruptive innovations, these risks decline over time.
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The reason for this risk decline is because:
? Deep tech solutions are innovative and address our major challenges
? Deep tech ventures generate more patents, which deter competition and retain value through licensing or acquisition
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And when it comes to funding, deep tech moves faster.
From Series A to Series D, outperforming traditional tech. As per McKinsey & Company, the median time between funding rounds from Series B to D for deep tech ventures decreases from approximately 23 months to 20 months, but for traditional tech ventures, it increases from roughly 20 months to 23 months.
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Europe’s achievements in the past years are a strong indicator of Europe’s potential to become the powerhouse in deep tech space.
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From 2019–23, Europe’s share of the global investment in deep tech leaped from 10 percent to 19 percent and accounts for approximately 44 percent of all tech investments in Europe.
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Europe just needs to reduce the bureaucratic obstacles to nourish our startups and ease the process of starting a business through digitalization, fast, uncomplicated, and low-cost administrative processes.
#Venturecapital #AI #Deeptech #Startups
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