Deep Tech investment continues to gain steam in Europe
According to VC market analysis platform DealRoom, in 2018, over €8 billion was invested in European startups with a Deep Tech edge.
Since the start of 2019, over 100 seed and early growth European Deep Tech startups have already been backed by VCs. DealRoom’s data show that most of these Deep Tech rounds tended to attract larger funding sizes than those of startups from other sectors.
First, let’s quickly define ‘deep tech’.
What are Deep Tech startups?
Deep Tech is a subjective term that normally refers to fundamental breakthroughs in science and engineering that profoundly impact industries and people’s lives.
Examples include, but are not limited to: artificial intelligence, cybersecurity, Interner-of-Things, life sciences, chemistry, green energy, robotics, autonomous driving & delivery, space-flight, aviation, computer vision, speech recognition and AR/VR.
Unlike typical business and consumer innovations using existing technology, Deep Tech companies create revolutionary solutions that redefine markets and industry processes. Uber for instance, would not qualify as a deep technology company because they simply leverage today’s ‘sharing economy’ and their service was built using ‘off the shelf’ tools and technologies.
Conversely, Deep Tech innovations solve previously-intractable real-world problems, e.g. medical devices and drugs that cure disease and extend life; artificial intelligence to forecast natural disasters such as earthquakes; and clean energy solutions that can help stem global warming.
Deep technology startups often share the following qualities:
- Developed from years of research and lab testing
- Ownership of patents and other valuable forms of intellectual property (IP)
- Technical board of advisors in additional to the board of business advisors.
Deep tech startups by total funding
DealRoom published this year a list of VC backed startups with an HQ location in Europe and the ‘deep tech’ tag. They only looked at seed and early growth startups that raised their last funding round in 2019. The list was ordered by total funding amount.
#1 OpenGamma
#OpenGamma creates a derivates analytics platform, that helps its users (banks, pension funds, hedge funds and asset managers) make decisions to drive down trading costs.
Total funding: €43.1 m
Most recent funding round: $10.0 m SERIES E
#2 Exscientia Limited
Exscientia uses AI driven systems to automate discovery and design of new drugs — generating candidates in less time compared to traditional approaches
Total funding: €38.0 m
Most recent funding round: €23.0 m SERIES B
#3 Novelda
Novelda develops their advanced Xethru sensor technology to capture the smallest human movements and respiration without skin contact.
Total funding: €35.5 m
Most recent funding round: $15.0 m GROWTH EQUITY
#4 Tibber
Tibber develops a mobile application to help its users lower their energy consumption by smart analyses that calculate how much energy your home needs.
Total funding: €26.8 m
Most recent funding round: SEK 110 m LATE VC
#5 eSmart Systems
eSmart Systems builds a SaaS platform using big data and AI to enable the energy industry and smart communities with actionable insights.
Total funding: €24.2 m
Most recent funding round: NOK 120 m EARLY VC
#6 GeoSpoc
GeoSpoc creates a spatial big data / machine learning platform for its users to visualise their data and extract hidden insights from it.
Total funding: €22.9 m
Most recent funding round: £10.0 m EARLY VC
#7 Aire
Aire uses AI to provide better credit scoring of consumers that apply for a credit or loan — offering a second chance when a customer doesn’t meet the requirements of a traditional credit bureau.
Total funding: €22.7 m
Most recent funding round: £8.4 m EARLY VC
#8 Nivaura
Nivaura builds smart software to bring modern digital services to the traditional capital markets, for the formation, performance and enforcement of financial instruments.
Total funding: €17.5 m
Most recent funding round: €17.5 m SEED
Deep Tech unicorns in Europe and the UK leadership
Last year was a new record for investment in Europe and the UK in particular acquired a leading role when it comes to AI companies.
UK artificial intelligence startups raised $1.3 billion in 2018, maning they raised nearly as much capital as France, Germany, and the rest of Europe combined
The UK now counts at least five AI-tech unicorns vs. two in the rest of Europe and Artificial Intelligence (AI) is now pervasive across nearly every industry vertical, since it has become a core part of nearly every major tech company.
The UK is home to many companies that drive the development of AI forward, across different fields of AI such as: autonomous vehicles (Five AI, Starship), computer processing (Graphcore, Cambridge Quantum), Healthcare (Babylon) and security (Darktrace).
Leading Examples of Deep Tech Startups
Graphcore
Founded: 2016
Funding: $310M (valuation $1.7B)
HQ: Bristol
Field: Microprocessors
Developing a new processor specifically designed for AI: Graphcore’s Intelligence Processing Unit (IPU) is designed to lower the cost of accelerating AI applications in cloud and enterprise data centers, to increase the performance of both training and inference by up to 100x compared to the fastest systems today.
CQC
Founded: 2014
Funding: $66M (valuation $200M)
HQ: Cambridge
Field: Computing
Software company combining expertise in Quantum Information Processing, AI, Optimisationand Pattern Recognition. It has developed solutions suchas an operating system for quantum computers, AI algorithms for anomaly detection & classification of real-time data and a secure authentication & quantum resistant cryptocurrency.
Starship
Founded: 2014
Funding: $42M (valuation $100M-$150M)
HQ: London
Field: Autonomous Vehicles
Building a network of self-driving delivery robots. Autonomous for 99% of their journey, the robots work from local hubs to deliver goods within 30 minutes.
Darktrace
Founded: 2013
Funding: $230M (valuation $1.7B)
HQ: UK/US
Field: Cybersecurity
Self-learning AI designed to fight back cyber-attacks in real time. It protects the cloud, SaaS, corporate networks, IoT and industrial systems against all types of cyber-threats.
Improbable
Founded: 2012
Funding: $652M (valuation $2B)
HQ: London
Field: Machine Learning and AI Computing
Focus on large-scale simulations in the cloud, enabling virtual worlds of unprecedented scale and complexity. The company is dedicated to building powerful technology designed to help solve previously impossible problems and enable the creation of new realities.
BenevolentAI
Founded: 2013
Funding: $215M (valuation $2.1B)
HQ: London
Field: Health
Global leader in the development and application of artificial intelligence (“AI”) for scientific innovation. The company aims to accelerate the journey from inventive ideas to medicines for patients by developing AI to generate new treatments.
Why This Growth?
VC money is increasingly coming into this space because of the huge market opportunity for these Deep Tech firms and their disruptive technologies.
Global revenues from AI for enterprise applications is projected to grow from $1.62B in 2018 to $31.2B in 2025 attaining a 52.59% CAGR in the forecast period. Image recognition and tagging, patient data processing, localization and mapping, predictive maintenance, use of algorithms and machine learning to predict and thwart security threats, intelligent recruitment, and HR systems are a few of the many enterprise application use cases predicted to fuel the projected rapid growth of Deep Tech in the enterprise world. Source: Statista.
84% of enterprises believe investing in AI will lead to greater competitive advantages. 75% believe that AI will open up new businesses while also providing competitors new ways to gain access to their markets. 63% believe the pressure to reduce costs will require the use of AI. Source: Statista.
Where Are We Heading Towards?
Data shows that the European Deep Tech industry has flourished over the past decade, and a new ecosystem with both sophisticated and sustainable financing is emerging, opening a door for a even more investment interest.
This will have a major impact on Europe and Britain’s AI fortunes for years to come. The context is important. At a time of Brexit and a US-China trade war, everyone wonders what Europe’s — and in particular, the UK’s — role will be in the global economy.
Some count it out. Others argue that it will be a leader in ethical business, leveraging the EU’s tough privacy rules implemented last year. But the reality will probably be different: Britain and Europe look set to be the AI R&D lab of the world.
In the past, the main driver was the excellent UK universities like Oxbridge, Imperial and UCL. They trained the talent that now works at leading US technology companies. But these days there’s much more happening. In the last 18 months, US technology companies have made deep inroads into the UK ecosystem to strengthen their AI products. This is in turn fuelling a local ecosystem which is growing on its own term at a pace never seen before in the Old Continent.
Francesco
Director of Silicon Roundabout — The biggest Startup Hub and Tech Community in the UK
CEO of AGÀPE Properties — The first UK Property Investment and Multi-Let Management Company accepting cryptocurrencies
