“Diving into Deep Tech” was the name of an event hosted by Hamburg Invest and the law firm A&O Shearman. The topics covered were the opportunities and risks involved in setting up a deep tech startup and what needs to be considered when looking for investors. This article summarises the most important points.
There is no completely clear definition of “deep tech”, but it can generally be said that it refers to technologies that have a high degree of innovation, whose development involves a great deal of effort and which solve a significant problem. One example from Hamburg is the startup Holy Technologies, which Moritz Reiners, one of the founders, presented at the event. Holy has lightweight components made from carbon fibres produced by robots, saving 50% in costs compared to conventional manufacturing methods. The parts are also 20% lighter and fully recyclable. The potential is huge in sectors such as the automotive and aircraft industries or for wind turbine rotors.
What to consider with deep tech
Startups such as Holy Technologies can be extremely attractive for investors if certain conditions are met. Lawyers Dr. Stefan Witte and Johannes Schmidt explained the challenges that await both sides and how an investment can pay off. Deep tech usually involves a greater investment of time and money, so stamina and a solid financial base are required. With complex technologies, the number of competent specialists is also very limited, so the composition of the team and its stability are even more important than usual for startups. A realistic market assessment is also relevant; some innovations come too early, others are already outdated when they finally reach market maturity. Finally, it must be clarified where the rights to a technology lie and whether it is or can be protected by patents.
An investment in a deep tech startup therefore requires particularly careful consideration and it should be ensured, among other things, that a startup does not give up too many company shares too early. There must be enough leeway for high-value financing rounds, which are essential for a growth course. Once this course has been found, the chances of success are above average. Deep tech attracts particularly solvent customers, for example from the state, and makes higher profits. Venture capitalists have long recognized this, with around 35% of their investments in Europe going into deep tech. However, the really big rounds are still closed in the USA, but convincing startups from Europe also have a chance there. It is therefore worth promoting deep tech, especially in Hamburg.
