Deep-tech startups require substantial funding capacity over an extended period due to the infrastructure, skills, and resources needed. The BCG and Hello Tomorrow study highlights that 80% of deep-tech startups consider funding as the most critical resource, based on the survey of 400 deep-tech startups.
Venture capital is a key source of funding for startups at this stage, but the amount of capital available for early-stage deep-tech companies is limited.
However, despite the inherent risks of failure, businesses and investors have shown increasing interest in deep-tech, and investment in deep-tech has risen in recent years. Here are some sources of funding for deep-tech startups:
Venture Capital: Venture capital is a key source of funding for startups at this stage, but the amount of capital available for early-stage deep-tech companies is limited.
As indicated in the recent Dealroom guide (“Deep Tech: Europe | Dealroom.co. (2023)”) – “Deep Tech is one of the biggest VC investment categories in Europe. In 2022, $18 billion in venture capital was invested in Deep Tech startups in Europe, a slight slowdown from 2021, but still two times more than in 2020”.
Corporate VCs: Deeptech corporate venturing (CV) is the second-largest source of funding for deep-tech startups.
The intent behind these deep-tech corporate investments is to enable companies to quickly gain expertise in leading-edge technologies and pursue potentially disruptive innovations without building internal capabilities from scratch.
Government Grants and Subsidies: Deep tech startups can often receive grants or subsidies from the government to fund their research and development.
Angel Investors: Angel investors are high net-worth individuals who provide funding for startups in return for an ownership stake.
Crowdfunding: Crowdfunding is a way for startups to raise money from a large number of people, typically through online platforms.
Loans: Startups can also obtain loans from banks or other financial institutions.
Accelerators: Accelerators are programs that provide startups with mentorship, resources, and funding to help them grow. These programs are often run by established companies, universities, or non-profit organizations.
Despite the inherent risks, the increasing interest from businesses and investors in deep tech indicates a promising future for the sector. With a combination of strategic funding sources and determination, deep tech startups can continue driving technological progress and making a positive impact on various industries and society as a whole.
AI helped shape this article, but the ideas remain human at heart.
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The TD Shepherd team is happy to congratulate the Qualinx B.V. team on successfully raising €20 million from Dutch investors. TD Shepherd has provided strategic support to Qualinx over the years (starting in 2018), witnessing each step of their journey; their growth and success, makes us truly proud of their outstanding achievements.
If there’s one thing we’ve learned about surviving the Valley of Death in deep tech, it’s this: don’t go it alone. This stage is all about leveraging relationships, and corporate partnerships can be your most valuable lifeline. The key is to think beyond customers.
The so-called “Valley of Death” in deep tech isn’t just about running out of cash—it’s about navigating a period where expectations clash with reality. Investors want to see traction, but your tech isn’t market-ready. Customers are intrigued, but they’re not ready to commit. And your R&D costs? They’re still burning through cash like it’s a bonfire.