Life of a salesman in deeptech

Last week was Slush in Helsinki. An event that starts before winter dawn and ends after winter dusk. The fair is in  itself a twilight zone, in terms of luminescence. I had the pleasure of being two full days at the EIC/EIB/EIF family stand, actually the stand of the European Union. I like the salesman side of the work of President of the EIC Board. That might be as I am myself son and grandson of three (dead) salesmen. So fairs are my habitus. I am not selling, not are my colleagues in the family. At Slush we had an “Investor” badge on. So we are presenting our financial instruments, and guide interested Start-Ups through the requirements and procedures of application.

One should understand that the Instruments of the EIC: pathfinder/transition and accelerator are niche instruments. While we have funded as of today over 500 companies, that represents around 0,01% of all SMEs in Europe, and probably below 0,5% of start-ups. Also the 10 bill Euro budget is small compared to the total financial requirements of start-ups, even if we take into account that each Euro invested by the EIC has a private multiplier of 3,2. An important reason why the EIC is selective is the focus on DeepTech. So what does that Mean?

In Wikipedia DeepTech is defined as follows: “Deep technology (also deep tech or DeepTech) is a classification of (…) startup company, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges.[1] They present challenges requiring lengthy research and development, and large capital investment before successful commercialization. Their primary risk is technical risk, while market risk is often significantly lower due to the clear potential value of the solution to society.[2] The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce".

EIC Definition of DeepTech 

This is the definition we also tend to use as EIC Board with six critical terms:

• It is based on substantial scientific or very substantial engineering challenges (with non linear scaling up problems)
• It requires lengthy R&D investments (typically 3-5 years with limited revenue) and technical risks
• It requires large capital investments (2+ Mill Euro, but rather 5-10 Mln Euro)
• The market risk is often significantly lower (although for us the market area must be at least the EU as a whole)
• It is based on solid Intellectual property and generates valuable IP that is hard to reproduce (the so-called freedom to operate clause)

It is important to see these clauses being translated in practice as evolving criteria. What was a technological risk in 2018, is possibly no longer so in 2024, and the freedom to operate might be lower as IP has been established. In the case of EIC new proposals might be evaluated against the evolution of the IP in the field and the portfolio of already funded ventures (especially in the challenges).

 AI, AI, AI!

The buzzword of these days (as at Websummit in Lisbon is AI or Artificial Intelligence. AI has somehow eclipsed terms as big data (very popular around 2016), machine learning (around 2019) and software as a service (already for 20 years), while it often combines elements of the above. Besides very specific exceptions, one could consider frequency and correlations based AI (even with learning effects) not as deep-tech. One might consider AI as deeptech when multivariate causalities have to be explained especially when there are evolving patterns in the data, and when the analysis leads to diagnostics and curing patterns. This can be in the medical domain (e.g. imaging, diagnostics and real time medical intervention), or is soil and agriculture: soil analysis in relation to fertilisation, CO2 sequestration and nutrient properties of crops cellulose contents of fibrous residual materials. In this all one could consider SaaS as a distribution model and not as a technology per se.

The Pathfinder for deepening tech

During Slush most companies were enquiring about the accelerator, our unique grant+equity instrument. Less in demand is the Pathfinder. I learned at different Universities that the pathfinder could be used to understand better the phenomena or the interaction of variables behind phenomena. Hence for companies with already commercial traction, the pathfinder can be an instrument to understand the background better. That can than enable a broader deployment of the technology.