Deep tech and climate tech - Insights
Deep tech refers to technologies that require significant amount of scientific and engineering research - the term is more commonly used in the context of startups working on such technologies.
Until a few years back, a large percentage of climate tech startups could be classified as deep tech startups as they were working on solutions that posed significant tech challenges - algae fuels, concentrating solar PV, second and third generation ethanol, bioplastics etc.
Deep tech, by its very nature, carries significant development & commercialization risks, and thus, not surprisingly, most of the startups in the earlier phase of climate tech investments failed. This gave climate tech itself a bad name and shooed investors away from it.
What is the status of deep tech in the current climate tech startup ecosystem?
A number of deep tech startups are oeprating currently in climate tech, but there are two main differences compared to the scenario about a decade back:
One, the proportion of deep tech firms in the overall climate tech firms has come down dramatically. If I were to take a guess, I would estimate that fewer than 20% startups in the climate tech space today are deep tech. This would have been north of 50% in climate tech's first avator.
Two, most deep tech startups today are working in domains such electric mobility, energy storage, low carbon meat alternatives and carbon capture. The development and commercialization risk profile for deep tech startups in these domains appear to be significantly lower than that for the domains dominated by deep tech startups earlier.
And that could make all the difference between big success and dramatic failures.