The deep tech era – an investment in future ground-breaking solutions

The thriving deep tech scene in Stockholm

Stockholm's deep tech ecosystem benefits from a strong synergy between academia and industry. The Royal Institute of Technology (KTH) and Stockholm University provide a steady stream of talent and a fertile ground for research collaboration, continuing to build a  European hub for innovative technology startups. 

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One example is the program Test Drive, a workshop series conducted by KTH Innovation and Sting. Through Test Drive, teams have a chance to jumpstart their companies, get mentored and pitch their ideas. Among the participants in the workshop series are Elisa Bin and Michael Neuman, both KTH students and co-founders of separate deep tech companies. Upon joining the program, they were newcomers to the arena, and have since learned a lot about navigating in the deep tech world and developing solutions for the future.

Changing the world one small research break-through at a time 

– Deep tech, to me, means having a solution deeply rooted in research and one that disrupts existing market offerings. It requires a substantial amount of expertise and time dedicated to learning and development, so deep tech is a very slow process. Because even if you create something fully functional, there’s usually still a lot of work needed before getting it to an end customer, says Elisa Bin, co-founder of ABConnect – a software tool that assists fleet managers in improving communication and coordination between different vehicles or robots. 

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Micahel Neuman is co-founder of Kitocoat, who developed a consumable, biodegradable coating that extends the shelf life of fruit and vegetables 3-7 times – reducing food waste, plastic packaging and the need for refrigeration. He adds:

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– A deep tech solution should have the opportunity to potentially change the world. The mission for Kitocoat is to establish our product as a standard operating coating procedure for the entire fruit and vegetable industry to reduce the global food waste to a minimum.

The long road of turning science into market-ready solutions

One of the key challenges in deep tech is balancing scientific innovation and practical engineering. Many startups have difficulties transitioning from groundbreaking discoveries to commercially viable products or services. While scientific breakthroughs are essential, there is often a need for a smoother path from lab to market. A key to this is communication.

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– As a researcher, it's exciting when something is more complex than you think. Bridging the gap between our research and potential investors, and later on, customers, required a lot of communication and education regarding the need for our solution, Elisa Bin says.

Technology should precede scientific breakthroughs

Investors often seek innovations that are not overly reliant on scientific advancements yet able to develop technology that supports their businesses. Thus, achieving successful commercialization requires strategic planning, collaboration, and a supportive ecosystem.

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"One thing I appreciate when investing in a deep tech company is that it’s based on a scientific breakthrough. But to attract funding, you have to get past that. Before you can start a company, it has to turn into an engineering challenge. I’ve invested in companies that, in hindsight, perhaps should have stayed in academia for another five or ten years. You shouldn't need scientific breakthroughs to build a company around your innovation."
– Nicklas Bergman, VC at Intergalactic Industries.

Deep tech entrepreneurs – or crystal ball visionaries?

Companies developing deep tech solutions for the future need to rely on both innovation and creativity. With no ability to foresee forthcoming challenges, emerging competition, or market changes, entrepreneurs must become visionaries. They will constantly need to envision how the world might transform and the pivotal role their technologies could play. Elisa Bin explains how they go about working with ABConnect in this challenging but exciting environment:

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– Developing our company requires a lot of imagination! You're trying to see how the world will be in many years and contribute to that big picture. What keeps us going in the project are small achievements daily. One of the possible uses of our product would be having, for example, a fleet of autonomous vehicles that can communicate with each other or with control towers. We are lucky to have prototypes in the research center that can simulate what it could look like. 

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For Michael Neuman and Kitocoat, their antimicrobial spray is already a finished product, after over 20 years of research and development of the idea and tweaking it for the food industry. However, ongoing verification is essential to maintain consistent results before Kitocoat’s eventual launch, so the release date remains uncertain.

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– We believe Kitocoat could be a valuable tool to improve sustainability from many different aspects: reduce food waste, save energy and water, and reduce greenhouse gas emissions. In a market with versatile applications, there will always be some competition. But everyone knows it’s essential for improvement, Michael Neuman says.

Personal motivators: A key to deep tech investment

Entrepreneurs typically begin by identifying a market gap with clear demand and user needs – or, as often in deep tech, through scientific research. These founders commonly prioritize academic pursuits over world-changing or profit-oriented aspirations, focusing on publishing research papers and reaching new academic heights. VCs investing in deep tech companies have learned that it’s tough to switch mindsets into a commercialized version of research and publications, and that it requires something from these founders that not everyone has.

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“From my perspective as an investor, it’s important to dig into personal driving forces. What motivates you? Will you have the resilience, the guts, the grit to put up with all the challenges you will meet every day for the next 5-10 years? And will you listen to my advice along the way? It’s all about cooperation and trust to be able to succeed.” 

– Anna Haupt, Investment Director at Industrifonden

“There’s no good time for a bad idea – or a bad time for a good idea”

For Elisa and Michael, the Test Drive program played a significant part in gaining a deeper understanding of the deep tech industry and meeting like-minded entrepreneurs:

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– Test Drive was like a startup crash course, and was very hands-on in helping us define our business and refine our pitch. Not only was it a great opportunity to build my role as CEO for Kitocoat, but helped our company to learn more about the deep tech arena and other companies, Michael Neuman says. Elisa Bin agrees:

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– It’s been inspiring to see so many innovative projects and people striving to bring their ideas from the lab into the real world. The program really created a safe space for knowledge sharing, mutual support, and the birth of new ideas and collaborations – all while fostering a truly dynamic and diverse community.

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Elisa Bin paints a picture of the deep tech arena they’ve just entered as a flourishing and encouraging community, even in times of economic instability, recession and outer world conflicts. Anna Haupt summarizes the situation:

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– In hard times, you find new solutions. In terms of focusing on innovation, adapting and applying new ideas on the market, there’s no bad time to do it. We are all affected by the serious situation in the world, but it’s also making us more focused on the small things that we can impact. That’s why there’s no time to wait to start a company.

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