In the Know” is our engaging blog series that explores various subjects with the guidance of esteemed experts in their respective fields. Each instalment of “In the Know” provides readers with a unique opportunity to gain a comprehensive understanding of complex concepts as we navigate through the expertise of our guests to shed light on the nuances of their field.

In this instalment, we explore Investing in Deep Tech Startups with Moien Giashi, Principal at GreenSky Ventures.

Deep Tech start-ups present significant potential upside opportunities for those groups able to evaluate the science and properly assess its commercial potential. The innovative solutions that emerge from deep-tech companies often foster economic growth and create high-value jobs, making deep-tech an important area for venture capital and angel investment. It is time for angel investors to turn their focus on deep tech to increase their societal impact while creating alpha.

What is deep tech?

Deep tech is a term used to describe solutions based on scientific or engineering breakthroughs that require significant research and development investment and which can most often be protected by patent, trade secret or other intellectual property registration.

How does GreenSky define deep tech?

GreenSky defines ‘Deep Tech’ companies as companies providing disruptive technology solutions based on significant engineering and scientific innovations, and this includes companies working on advanced materials, advanced AI algorithms, quantum computing, and biotechnology applications.

Many deep tech startups are founded by scientists and engineers and come out of research labs. Often, the years of research and development (R&D) that go into developing the technology are hidden in the subject matter and/or field expertise of the founder.

What is the importance of deep tech?

While often difficult for an investor to evaluate, Deep Tech start-ups present significant potential upside opportunities for those groups able to evaluate the science and properly assess its commercial potential. The innovative solutions that emerge from deep-tech companies often foster economic growth and create high-value jobs making deep-tech an important area for venture capital investment. Unlike more conventional software solutions that are often less technically complex, deep tech solutions utilize cutting-edge scientific advancements to provide new and disruptive solutions, often in large and scalable market deployments. 

What are the key points in evaluating a deep tech company?

With any start-up – deep tech or otherwise – the quality of the management team, the degree of product-market fit and the market into which the company is selling are critical elements to consider when evaluating the company. 

In addition to these factors, it is important to assess the degree to which the company might be successful in filing for a patent, trade secret or other intellectual property protection. The extent to which the product or technology fits into the existing workflow of the intended market are all critical.

At GreenSky, we follow a methodical approach to evaluating opportunities, which is as follows:

Strength of the Management and Tech Team

• Evaluate the qualifications and experience of the founders, key executives and technical teams. A successful deep tech venture requires a team with strong technical expertise and industry knowledge.

Robustness of the technology

• Evaluate the robustness of the technology, including its scalability, reliability, and resilience to potential challenges.
• Understand the roadmap for future technological developments and innovations. Assess the company’s ability to stay at the forefront of technological advancements in its field, including an assessment of similar or potentially competitive innovations in the market in which the company intends to operate.
• Assess the end-user experience and any potential friction points that might hinder adoption within the target market.
• Seek insights from industry experts and key opinion leaders who can provide an unbiased assessment of the company’s technology and its potential impact on the market.

Product-Market Fit

• Look for evidence of customer validation and feedback. Understand how well the product or technology addresses a real market need and whether there is a demand for it. Make sure that the innovation is not a ‘solution looking for a problem’. 
• Assess the potential for the product to scale in the target market and whether it can adapt to evolving market needs.
• Consider how well the product or technology fits into the existing workflows of the target market. A seamless integration can enhance adoption and acceptance.

Intellectual Property (IP) Protection:

• Investigate the extent to which the company has protected its intellectual property through patents, trade secrets, or other means. 
• Evaluate the strength and uniqueness of the IP portfolio. How easy or difficult is it to come up with a different solution without infringing on the IP?

• Early in the diligence process, do a general search for competing technologies and, later in the process, engage a patent lawyer or other professional to assist with a prior art search to assess whether potentially competitive intellectual property exists.

While there are many areas about which GreenSky is excited, here is a list of some specific technology developments that we will be watching closely:

Quantum Computing: We anticipate steady progress with potential breakthroughs in quantum sensing, allowing for the effective initial use of quantum computing for encryption/decryption, AI/ML development and advanced materials applications.

Semiconductor Innovations: Ongoing efforts towards semiconductor sovereignty, with developments like NVIDIA’s H200 and focus on areas like power electronics in EVs.

Space Exploration: As private companies increasingly enter this space (pardon the pun!) and as the cost per kilogram of getting mass into space continues to decrease, innovation will continue to develop to take advantage of telecommunications, resource extraction, exploration and other exciting new opportunities.

Renewable Energy and Climate Tech: Continued growth in solar adoption as one of the cheapest energy forms, renewed interest in nuclear energy, and innovations in climate mitigation technologies such as carbon capture and utilization.

Biotech Advancements: Developments in FDA-approved gene therapy, upcoming clinical trials in various medical areas, such as cancer biomarkers, and other innovations in the longevity space. In biotech, advances in synthetic biology for sustainable materials present further interesting development opportunities.

About the Author

Moien Giashi is a Materials Scientist and Researcher turned private capital investment professional. Moien focuses on deep tech and IP-backed startups working to solve the world’s biggest problems. Moien’s areas of expertise include cleantech, energy, packaging, advanced materials and circular solutions. In this article, Moien shares more about deep tech investment.

About GreenSky Ventures

GreenSky Capital Inc. is an award-winning Toronto-based firm that makes investments in early-stage Canadian technology companies through its affiliated venture capital funds, GreenSky Accelerator Funds I – V. GreenSky principals bring a combination of experience in technology, entrepreneurship, law and finance to high-growth potential companies and dedicated entrepreneurs. Learn more about GreenSky at greensky.vc