What is ‘Deep Tech’?

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Business Leader breaks down what Deep Tech means, and its role within the UK tech sector.

Deep technology, also known as ‘hard tech’ is a type of company – traditionally a start-up or scale-up firm – that provides a tech-based solution to a scientific or engineering challenge.

Due to their complex nature, they often receive a high level of R&D (research and development) funding from many of the world’s highest-profile venture capital firms. This often means that they often are loss-making entities for a long time before their applications are introduced to market.

The companies and technologies that are then produced from these entities often then have high-value intellectual property (IP).

They are often referred to as ‘disruptive’ due to their innovative nature, utilising new technologies to change the industry it is being introduced to.

What does the future hold for Deep Tech in the UK?

Gerard Grech, Founding Chief Executive of Tech Nation, shared his outlook for the future of the tech sector and the importance of deep tech.

This year has highlighted the UK tech sector’s enormous resilience and world-beating innovative spirit. In the face of a major global crisis, it has not only survived; in many areas, it has boomed. From EdTech to HealthTech, tech scaleups are at the centre of rebuilding the British economy and setting new standards worldwide.

Now the focus turns to the future, as the UK pivots to a wider global role. Developing Britain’s AI-powered deep-tech is especially critical. Much of our future economy will be built on this new technology that leverages machine learning for faster innovation. Bold investment is needed in R&D to boost Britain’s new deep-tech companies and ensure our global competitiveness.

These are truly exciting times for UK tech. The successes of the past decade have shown what the UK is capable of when policy foresight, investment and a diverse and ambitious pool of talent come together. By continuing to set our sights high, the next decade promises to be the most innovative yet.

R&D Investment

The UK is trailing on R&D, with some private overseas companies investing more in R&D than the UK does as a nation. Data from the ONS finds that UK R&D expenditure (public and private spending) was just under £30bn in 2018, whilst in the same year, the combined R&D expenditure of Amazon and Alphabet (on their own R&D activities) was £33bn. Comparing this on the global stage, total US R&D expenditure in 2018 reached $551bn, while China’s R&D expenditure reached $463bn.

As the potential of technologies like AI, machine learning and quantum computing become fully realised and applied at scale, the UK will have to find ways to ramp up the R&D intensive capabilities it possesses and capitalise on a record year for deep tech VC investment, which increased by 17% to just under $4bn in 2020.

Bristol-based deep tech firm Graphcore drove UK tech success in 2020

Graphcore was recently announced as one of the top 10 superstar scaleups in 2020 according to Tech Nation – which between them secured a fifth of total UK tech VC investment, at £2.5bn.

Nigel Toon, Graphcore CEO, comments:  “The UK is continuing to punch well above its weight in terms of building and growing world-class technology companies, even in the midst of these unusual and uncertain times. We are, of course, delighted that Graphcore is identified as one of the standard bearers for this national success story. Deep Tech represents the coming together of so many great British attributes – our reputation for innovation in science and engineering, the excellence of our academic institutions and, most recently, our status as a leading player in the development of artificial intelligence.”

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