Interface Fund thesis: why we need to double down on deep tech startups
Interface Fund invests in hard technical problems that can revolutionize the world and affect billions of lives.
We observe a nascence of the new paradigm of deep tech
Since 2008 we witnessed a digital renaissance where software has become the great equalizer, democratizing access to problem-solving capabilities once reserved for the few. Paired with the AI revolution, it is easier than ever to fill the market with solutions for any problem that software can solve.
However, the simplicity of software solutions has ushered in a new paradigm shift in science and engineering, enabling us to tackle problems that were previously insurmountable. This trend is set to persist, making once-challenging tasks increasingly achievable in the future.
The speed of bringing science to the market is the fastest in history
Creating a unicorn in deep tech takes 5.21 years and $115m on average. Furthermore, we typically observe early market validation within 2–3 years following our initial pre-seed investment.
Recession boosts innovation and creativity
Navigating the startup landscape amidst economic downturns presents significant challenges. However, amidst such shifts in market dynamics, opportunities often arise from evolving consumer behaviours and underlying drivers.
On June 29, 2007, the inaugural iPhone made its debut, a mere half-year prior to the onset of the Great Recession. This milestone, along with the subsequent introduction of the App Store in 2008, heralded a new era wherein companies innovatively harnessed smartphone capabilities to both enhance earnings and foster savings.
Amidst the current recessionary climate, compelling value propositions often emerge. While we navigate the depths of this economic downturn, aspiring entrepreneurs may feel hesitant about embarking on their own ventures.
Concurrently, we bear witness to yet another seismic technological upheaval, characterized by advancements in AI, manufacturing, aerospace, energy, transportation, genomics, neuroscience and myriad other domains. Entrepreneurs adept at leveraging these cutting-edge technologies to develop products that cater to evolving consumer and enterprise demands stand poised to establish startups that not only weather the recessionary storm but flourish long into the future.
Moreover, recessionary periods historically have proven to be fertile ground for innovation and entrepreneurship, particularly in the hardware and science sectors. During the Great Depression, companies such as Hewlett-Packard (HP) and Texas Instruments (TI) were founded, laying the groundwork for the modern technology industry. Similarly, the bursting of the dot-com bubble in the early 2000s led to the emergence of new business models and technologies, including social media platforms like Facebook and LinkedIn. Additionally, the 2008 financial crisis spurred innovation in fintech, renewable energy, healthcare and consumer sectors, with companies like Airbnb and Uber leveraging technology to disrupt traditional industries and create new market opportunities.
By capitalizing on the unique advantages offered by recessionary environments and drawing inspiration from historical precedents, entrepreneurs can navigate the challenges of economic downturns and emerge with innovative solutions that shape the future of technology and industry.
Geopolitics drive the need for new decentralised industrial solutions + increases in defence budget and applications
The desire for the U.S. and its allies to be more self-reliant, solve its most glaring issues and stay ahead of its rivals can be found across the political spectrum.
Over the past 50 years, the Pentagon’s Defense Advanced Research Projects Agency (DARPA) has produced an unparalleled number of breakthroughs. Arguably, it has the longest-standing, most consistent track record of radical invention in history. Its innovations include the internet; RISC computing; global positioning satellites; stealth technology; unmanned aerial vehicles, or “drones”; and micro-electro-mechanical systems (MEMS), which are now used in everything from airbags to ink-jet printers to video games like the Wii. Though the U.S. military was the original customer for DARPA’s applications, the agency’s advances have played a central role in creating a host of multibillion-dollar industries.
Western geopolitics agenda is known for harnessing science and engineering advances to solve real-world problems or create new opportunities. At Defense, GPS was an example of the former and stealth technology of the latter. The problems must be sufficiently challenging that they can only be solved by pushing or catalyzing the science. The presence of an urgent need for an application creates focus and inspires greater genius.
We’re living in a new geopolitical reality, where decentralisation, innovation in infrastructure, and independence in manufacturing and resources become increasingly admitted and funded on a national level, boosting the ecosystem and early-stage applications thus positioning deep tech startups at the most favourable conditions to start the most complex engineering project we ever witnessed in history.
