By 2026, DeepTech will have evolved from a niche area into a strategic priority for venture capital. While DeepTech does not promise instant returns, it is creating the technologies that are shaping the new economy in areas such as energy, space, and bioengineering.

What is DeepTech, and why does it continue to attract investment?

Definition of DeepTech and its main characteristics

DeepTech is science turned into business. At the heart of this field lies the development of solutions based on fundamental discoveries in physics, chemistry, biology, and engineering. Therefore, such companies cannot arise spontaneously or after a few months of development. They require years of research and development, prototyping, experimentation, and testing. It is this scientific depth that distinguishes DeepTech companies from most conventional startups.

The defining feature of a DeepTech company is its high scientific and technological barrier to entry. Its products cannot easily be copied or reproduced. Rather than being a new smartphone app, it is a breakthrough technology: a new type of battery, a quantum encryption method or biomaterials that replace plastic, for example.

Another key feature is the long investment cycle. DeepTech is not suitable for those who expect a quick cash-out. Investors fund scientific teams at an early stage, knowing that the first results may not appear for 5–10 years. Nevertheless, the innovation application can be enormous. Just imagine the potential gains in areas such as artificial protein synthesis or thermonuclear energy.

Such companies operate at the intersection of the laboratory and the business field. Their strength lies in their team of scientists, engineers, and entrepreneurs who collaborate to transform theory into products. Although the route-to-market is long, it is these companies that will dominate the market of the future. DeepTech is difficult to enter and even more difficult to catch up with. This is why venture capitalists view this area as high risk but potentially offering unprecedented returns.

What sets DeepTech apart from AI, biotech and other technology startups?

Although DeepTech is often mentioned alongside AI, biotech or greentech, there is a fundamental difference between them. AI and biotech are applied fields that may or may not be part of DeepTech. For example, a product with artificial intelligence may just be an algorithm or service without a deep scientific core. DeepTech, on the other hand, begins where real science comes into play: physics, chemistry, materials science and quantum mechanics, for example.

While an AI startup can create a minimum viable product (MVP) in a few months, a DeepTech project requires several years just to refine its technological concept. Therefore, venture funds working in this area have a completely different profile; they focus on the long term rather than a quick exit.

Biotech is a similar but not identical field. While it is also science-based, it is primarily focused on medicine. DeepTech, however, covers a wider range of areas, including energy, defence, space, ecology, and transport. Its purpose is to lay the groundwork for new industries, rather than creating a product for a specific market.

Therefore, DeepTech is an approach in which science takes precedence over commerce, resulting in technological independence and a long-term competitive advantage.

Macro trends driving DeepTech growth

As of 2026, DeepTech will be generating a new wave of global interest. The reason is simple: governments, corporations, and institutional investors have realised that 21st-century challenges cannot be solved without novel technologies. This has led to strong support in the form of government grants, favourable regulations and international innovation development programmes.

The EU, the US, Japan, and South Korea are establishing special funds to support DeepTech startups. In Europe, for instance, the EIC Accelerator programme finances companies engaged in long-term R&D, thereby mitigating some risk for investors. In the US, DARPA and ARPA-E are playing an increasingly important role in supporting quantum, defence, and energy developments.

The second driver is environmental pressure. The search for new materials, energy storage methods and recycling technologies is being stimulated by global sustainable development goals. DeepTech plays a key role here, providing answers that traditional software cannot.

The regulatory aspect is also worth considering. Countries that invest in their own scientific research and development seek to reduce their technological dependence on others. This is creating a new geopolitical landscape of innovation, in which DeepTech is becoming a tool of national security.

The state of the DeepTech in 2025: an overview of the market and investment volumes

Total DeepTech investment

Despite the general cooling of the venture market, global investment in DeepTech is estimated to reach approximately $250 billion by 2025, and this figure continues to grow. This suggests that investors are increasingly investing in long-term technological solutions that will influence the future economy.

The United States traditionally accounts for the largest share of capital, with around 45% of all deals. This is where the leading DeepTech companies in fields such as quantum computing, robotics, space technology and bioengineering are concentrated. Europe follows with approximately 30% — the region actively supports DeepTech through government programmes such as Horizon Europe and the EIC Accelerator. Germany, France, and the Scandinavian countries play a special role by combining academic science with venture capital instruments.

Meanwhile, Asia is experiencing rapid growth and has already attracted more than 20% of global investment. China, South Korea and Singapore are establishing their own DeepTech hubs and investing in artificial intelligence, energy materials and new types of computing. In these countries, the state plays a pivotal role in everything from providing subsidies to creating special industrial parks.

Examples of major deals and startups in 2025

Several representative deals in 2025 illustrate the scale and diversity of DeepTech investments. For instance, Applied Intuition develops software for testing and validating autonomous vehicles. The company raised $600 million in a Series F funding round, reaching a valuation of $15 billion.

Then there's Kailera Therapeutics, which raised $600 million in a Series B round. This company develops obesity treatments. Another example is a Kardigan. This startup develops drugs to treat cardiovascular diseases and raised $254 million in a Series B round.

Investors and financing strategies operating in the DeepTech sector

Profiles of DeepTech VC and experimental funds

The profiles of DeepTech funds vary depending on strategy, timeframe, and areas of expertise.

Traditional venture capital funds that have added deep tech as a separate category remain focused on scalability and exit opportunities. At the same time, they are increasingly establishing internal technical departments for due diligence and post-investment support.

Funds specialising in deep tech have also emerged. These structures hire technical partners, engineers and scientists, build laboratory infrastructure and are prepared for longer investment cycles.

Corporate venture funds and industrial players finance startups that can be integrated into production chains or accelerate corporate R&D. Their strategy is not only profit-driven but also driven by access to technology.

There are also experimental funds that combine grants, subsidies and private capital. These are often established by universities or regional development agencies, and focus on reducing initial risk and providing infrastructure such as laboratories and equipment.

Funding stages: from pre-seed to commercialisation

Pre-seed: investors will check the competence of the team, the viability of the idea, access to equipment, patent intentions, and the results of the first experiments (proof of concept). In DeepTech, this could involve laboratory validation of a physical principle or an early prototype.

At the seed stage, investors want to see replication of results, stable protocols and repeatable tests. Expectations include a clear technical roadmap, initial partnerships with laboratories and industrial pilots, and initial results demonstrating scalability. At this stage, it is important to have an IP strategy that includes patents, licences, or exclusive research agreements.

For Series A-B, investors require confirmation of the economic model. For example, pilots with corporate partners. Here, capital is often invested in scaling up production, certification, and deployment of demonstration installations. Investors will assess the risk of scaling up production and the roadmap to securing the first paid contracts.

At the late stage/pre-commercialisation stage, investors expect profitable contract agreements, clear sales channels and preparation for exit. Investors require transparent financial forecasts, backed up by pilots and contracts. At each stage, DeepTech requires more specialised technical due diligence — investors not only look at business metrics, but also require a thorough understanding of the physical implementation and scaling risks.

Alternative sources of funding: government grants, European programmes, research institutes and corporate R&D centres

DeepTech significantly benefits from hybrid financing models. Government grants cover some initial scientific risks, enabling startups to concentrate on perfecting their technology without the pressure of immediate commercialisation. European programmes, regional innovation funds and instruments also provide funding, sometimes in combination with venture capital, which reduces the risk for private investors.

Universities and research institutes often provide startups with resources such as technology licences, joint laboratories and access to equipment, as well as co-foundership. This enables young teams to progress through the critical research phase without incurring significant capital expenditure on infrastructure.

Corporate R&D centres are another valuable resource, as they can facilitate pilot projects, commercialisation and pre-purchases through partnerships with industrial players.

Additionally, there are specialised acceleration programmes and incubators for startups in the fields of hardware and materials science, crowdfunding for demonstration products and non-dilutive financing.

The terms of the deal: equity, IP protection, long-term commitments and exit expectations

In DeepTech, the terms of deals have specific features that distinguish them from those of other startups. However, let's start with the similarities: equity is usually a compromise between the size of the investment, the need to maintain the founders' motivation and control over IP. Investors seek sufficient equity to influence key decisions, but founders should avoid excessive dilution in the early stages while the technology is still being developed.

Intellectual property protection is a critical component of the agreement. Investors expect a clear IP strategy, including patent applications, agreements with universities regarding invention rights and plans for patent coverage in key jurisdictions. Deals often include clauses on exclusive licences or options for future patents. For investors, this protects against the technology being easily copied; for founders, it is a source of value assessment.

Agreements frequently contain investor rights to participate in subsequent funding rounds, access to information, and dilution protection mechanisms. In DeepTech, exits are more typically M&A by strategic buyers (corporations and industrial giants), or less often IPOs. It is also worth bearing in mind that a quick exit should not be expected.

Barriers and risks: why DeepTech is a marathon, not a sprint

In DeepTech, depth takes precedence over speed. It is impossible to develop something in a year because innovation is based on complex scientific discoveries that require time, resources, and testing. This is why venture investors view DeepTech as a decades-long strategy.

R&D duration and prototype costs

In DeepTech, it is the R&D stage that determines whether a project will be successful or not. Technology development takes five to ten years here because we are not talking about software, but physical innovations such as materials, biomolecules, robotic systems and quantum solutions. Each experiment requires precision, expensive equipment, and a highly skilled team.

In DeepTech, a prototype is not just a presentation model; it is a fully-fledged engineering development that needs to be tested, certified and scaled. The cost of creating a single prototype can reach hundreds of thousands or even millions of dollars. Even then, there is no guarantee of success: many solutions never reach the commercial level.

These costs and timeframes transform the logic of venture financing. DeepTech requires 'long-term' investment — investors who understand that profits only come after many cycles of experimentation. However, once the technology is operational, it establishes an entry barrier that competitors find virtually impossible to overcome. This makes DeepTech one of the few areas where the risk is justified by scientific breakthroughs.

DeepTech forecasts and scenarios for 2026

Growth rates and key regions for DeepTech development

The DeepTech market is expected to grow at an annual rate of over 20% in 2026, making it one of the few sectors where speed is not the main indicator of success. The market is concentrated around three regions — the US, Europe, and Asia — each of which is developing its own innovation ecosystem.

In the US, Massachusetts, California, and Texas remain the leaders thanks to a combination of universities, venture capital and corporate R&D hubs. Meanwhile, Europe is investing in steel technologies and regional cooperation, with the Horizon Europe and DeepTech Talent Initiative programmes attracting thousands of scientists to entrepreneurship.

Asia is catching up fast. South Korea, Japan and Singapore are investing in DeepTech through state funds and alliances with corporations. Despite regulatory risks, China is increasing its support for quantum and biotechnologies in pursuit of strategic self-sufficiency.

Although not one of the global centres, Ukraine is beginning to form its own deep technology clusters, particularly in materials science, agrobiotechnology and energy.

In which areas can DeepTech be integrated with AI, biotech and green technologies?

Investors are once again turning their attention to DeepTech because of its potential to drive breakthroughs in related fields, particularly artificial intelligence, biotechnology and green technologies. It is at the intersection of these fields that solutions are born which have the power to transform the economy, medicine, and energy.

DeepTech companies develop the hardware and scientific foundations that are essential for the advancement of AI. New materials for chips, quantum processors, photonics and neuromorphic systems, for example, are not just technological innovations, but the key to scaling next-generation models. DeepTech enables artificial intelligence to evolve beyond cloud computing into the realm of high-performance, energy-efficient systems.

In biotechnology, DeepTech is evident in the use of quantum simulations to develop new drugs and in the application of nanomaterials for the targeted delivery of drugs within the human body. This intersection of biology, physics, and engineering can result in breakthrough therapies or bioengineering solutions for ageing, nutrition and ecology.

DeepTech also forms the basis of the green transformation, encompassing everything from new types of batteries and hydrogen fuel cells to carbon capture technologies and smart energy grids. Integrating AI enables the optimisation of energy consumption, the prediction of loads, and the reduction of losses. In this way, DeepTech does more than just assist; it creates the infrastructure necessary for the transition to a climate-neutral economy.

New business models and exit opportunities

DeepTech companies rarely opt for the traditional IPO route. This is because their technologies are too complex for the market to immediately recognise their potential. Instead, they adopt hybrid exit strategies. The most common of these is licensing technologies to large corporations. This enables them to monetise innovation before mass production begins, while retaining control over intellectual property.

Another format is partnership agreements with corporations that participate in product development and provide infrastructure, production facilities or joint research laboratories. Such alliances reduce risk and provide access to a ready-made distribution network.

The third option is strategic acquisitions. Large companies are actively buying startups to accelerate their own research. For investors, this does not mean instant returns, but rather a controlled exit with a long-term multiplier.

Therefore, exit in DeepTech is not the end, but rather the stage at which scientific innovation is transferred into the hands of those capable of scaling it up globally.

DeepTech project evaluation criteria: Intellectual property (IP), proof of concept, team, and scalability

Unlike other projects, investors in DeepTech look beyond the business model or market niche. The main criterion is intellectual property (IP). Patents, unique algorithms, materials, or technologies determine a startup's real value. Without a clearly protected IP, even a brilliant idea is meaningless.

Next is proof of concept (PoC). Investors want to see more than just a theoretical model; they want to see a practical result — a working prototype. This demonstrates that the technology has the potential to be scalable.

The third element is the team. In DeepTech, managers who can turn a laboratory discovery into a business are as important as scientists. Successful teams usually have a balance of technical and entrepreneurial skills.

Finally, there is scalability. Investors assess whether the technology can be adapted to different markets or industries. A DeepTech project with a narrow application area is often outcompeted by one with the potential to impact multiple sectors.

These four criteria — IP, PoC, team, and scalability — will form the new standard for evaluating DeepTech startups in 2026.