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Today , deep tech companies — companies creating cut - edge , transformative technologies based on scientific breakthroughs and R&D , and fetch them to marketplace — are in the end garner more attention from the VC community . From synthetical biology to quantum computing and battery recycling technology , the most innovative recondite tech companies today are create solutions that have the potency to transubstantiate entire industries and reference pressing global challenge .
Thousands of these exciting cryptical tech startups are based in Europe , and their founders are finally find oneself working capital more readily available on domicile greensward . European investment into deep technical school stay strong , despite broad funding grade free fall - offs . Dealroom ’s most recentEuropean Deep Tech Reportindicates a 60%increasein support levels over the last 24 months , compared to 2020 . This boom is also reflected inpatents pending and R&Dspending on moonshot engineering science .
Europe ’s climate - focused bass technical school companies organize a crucial part of this growing sector , and increasing investor sake is a big net positive degree . However , inscrutable technical school hitting the zeitgeist has been accompanied by a disturbing rise in mood - center startups positioning themselves as more “ mystifying tech ” than they actually are . This is what we intend by “ deepwashing ” : company without much evidence of meaningful R&D or any existent scientific discipline pitching their mathematical product as transformative . This is a problem , because it leads to vital funding being lead toward startups that will never basically agitate the dial .
By contrast , true climate deep technical school are raising funding to enable them to deliver technologies with the content to decarbonise the global economic system . And they ’re needed . As outlined in a recentInternational Energy Agency ( IEA ) report , almost one-half of emissions decrease solutions in 2050 will come from technologies that are currently at the demonstration or paradigm form — and major innovation efforts must take place this decade for make for these new engineering to grocery in metre . This is a gigantic undertaking , but Europe is ready to take it on : In 2022,42 % of all climate technical school dollar were raised on the continent , with investiture into the sector produce 26 % faster than the U.S.
Founders need to stop deepwashing
As specialist European clime tech investors , we are receiving “ deepwashing ” pitches from some solar , rut ticker and micromobility startups , as well as from a few food for thought technical school company .
We ’re regularly view squad using a band of words about their technical school , but when you really examine their company ’s product , there is no fundamental technology design . The Cartesian product is mayhap a slightly good coating of tech that ’s already on the marketplace today , or a serial of minute change that might go telling box up together , but in reality the business is not shift the dial .
For example , we ’ve seen solar startup founder pitch their companies as cryptical tech solar businesses , but slit beneath the surface and there is no major technical school innovation . The companies in dubiousness were often making installation innovations or a slight change in go - to - market strategy — and many of them could offer an edge for investors as a technical school / optimisation play — but they were not fundamentally changing the efficiency or electrical capacity of a technology . A deep tech solar startup needs to be essentially increasing the efficiency of a solar installation , not well accomplish its deployment .
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Out of over 100 solar companies we ’ve seen , around 80 % were not deep technical school — and those company that tried to sell themselves as such , we immediately marked down . To be clean , we could invest in both , but we label companies accurately . A capital example of this is our portfolio party SunRoof . This innovative inauguration offers executional and operational excellence deal part of the market that is not well help today , and is enable more solar to be installed as a result . We believe it is a not bad execution play , an integrated proposition talking best - in - family technology with a dissimilar route to market — but at its essence , it ’s not a deep technical school startup .
move forward , company require to get this right hand . It ’s about what you accentuate and pitch yourselves as . And being upfront will aid everyone imply , because if founders are reliable about the uniqueness of their technical school and excellence of their execution , they ’re more likely to get investment from the right investors .
What investors should do about deepwashing
The duty for combat a wave of deepwashing also lie in with speculation capitalist .
This demand making a grainy , quantitative judgment of every engineering ’s potential CO2 savings . As a VC , it is incredibly useful to have scientific and industry expertise on the team to aid in persuade out these assessments . We have found our TAM , our “ full avoidable emission ” measured , to be substantive in avoiding becoming distracted by “ shiny ” but non - transformational solutions and product .
We compare standardised technologies and alternative decarbonization pathway to determine which tech is the correct technical school to back and whether the tech really is dissimilar from others .
Many European investors are now adopting their own scientific discipline - based methodologies for identifying on-key deep tech suggestion , which is brilliant . We are also actively supporting this ontogenesis through our work withProject Frame — a catalytic upper-case letter - focused think - tank that has done extensive oeuvre on delineate what effective climate engineering science looks like and how it should be measured regarding mood impingement . This extend to opening such as theVenture Climate Alliance , which begins the cognitive process of formalizing skill - establish approaches at the core hypothesis of an effective climate investment approach .
battle deepwashing will also ask investor admitting what they do n’t know and ask for hyper - expert advice — even if they have a proficient background .
Every potential climate deep technical school investor should be ask , “ Is this a tech innovation that will in reality give a competitory boundary ? ” and then double - checking with experts in that sector on both technology and relevancy . I live this is the case from personal experience working in bombardment space . I have deep expert knowledge of the sector but still often need to reach out to cutting - boundary Ph.D. and professors for input and analysis on a company or sector . investor with good technical knowledge may have a go at it the correct question to call for , but to accurately assess a cryptical technical school proposition and to support whether it is relevant , then frontline , up - to - the - minute knowledge is often ask .
The European climate tech ecosystem must get the memo
As we have project with micromobility startup , when deepwashing endeavor win , it ultimately lead to a disproportionate amount of financing being invested into easy - to - access climate tech trend sectors but with no distinction . At this point , the majority of micromobility startup are commoditized , and in established market the vast majority are no longer ( and plausibly never were ) deep technical school companies . For example , the transport sphere accounts for only15 % of ball-shaped emissions , yet mobility companies received a disproportionate 48 % of climate tech sphere funding between Q3 2021 and Q3 2022 .
Going frontward , we need to see more capital going into the companionship actually creating transformative technologies . It is vital that we invest in those solar companies push the dial , companies address the battery recycling issue , and innovators building solutions that will radically change zip uptake . Any suspicion around the exact labeling of mysterious tech companies will only motor capital away from these critical nascent spaces .
As European climate tech VCs , we have a duty to invest the funds we have forensically for the sake of the satellite and our investor . If the maturate syndicate of investors interested in mood tech can become focused on the fellowship with the most mood carrying into action potential , it will allow first - charge per unit European trailblazer to truly undertake the climate crisis and become the next generation of tech giants in the cognitive process .
