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Deep Tech Investment: Do the rewards outweigh the risks?5 min read

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Posted date June 27, 2018
This is the first time ever in history that Techsauce has a debating session, with our speakers of immense expertise in venture capital investment and tech. The debate topic is on Deep Tech Investment: Do the rewards outweigh the risks? Techsauce Summit's first debate session

With new faces of hi-tech products such as autonomous cars, spaceships, humanoid robots, we, as Techsauce Summit attendees and probably tech evangelists ourselves, know that those deep tech holds great potential for future advancement. But, can the scientists and engineers create a sustainable profit from deep tech in a short period of time? Can these long-term investments be monetized swiftly? Will they actually have commercial implementation? And at the end of the day, is it worth the money, time and effort?

At this year’s very first summit debate, chaired by Champ Suthipongchai, General Partner of Creative Ventures, the topic is dissected into three dimensions: technology, implementation and market.

Affirmative:

Paul Ark, Managing Director of Digital Ventures

Norases Vesdapunt, Data Scientist of Robinhood

Negative:

Esther Loewy, Founder & CEO of Upround Ventures

Khailee Ng, Managing Partner of 500 Startups

Defining “Deep Tech”

Paul Ark, on the rewards of deep tech investment
Paul Ark, on the rewards of deep tech investment

Paul: Deep tech is like utilization of tech on AI. Look around you, Tesla, spaceship, all that, are what we call deep tech. But when we see the downside of it like the Tesla-Uber crash that killed humans in car accident, we have to also realize that the rates of death threat using Tesla is still much lower than human driving.

Esther: We have to consider the following key points: is it actually deep tech or sci-fi? Is it science that is aligned with business application that you understand what you are getting at the end of the day? Or is it just a utopian idea that is not going to accomplish anything? That is the thing we have to triple check.

Khailee: Humans are getting driven away by media and statistics. From an investor stand point, we need a commercial application for those deep tech. Today, deep tech investors may be more interested in the technology rather than the business application. There are a lot of deep tech that existed since the 40s and 50s which scientists still haven’t seen the commercial application up to date.

What are some challenges you see in the customers or companies in adopting deep tech?

Esther Loewy and Khailee Ng on the risks of deep tech investment
Esther Loewy and Khailee Ng on the risks of deep tech investment

Esther: Implementation. You need a champion in the organization. Because everyone of us here, everyone who goes to tech conference is an evangelist – we believe that technology is here to fundamentally improve lives, improve efficiency, reduce waste… but, if you don’t take that love affair with this technology and believe into the pragmatics and have the champion within the organization, within the banks, within the industrials, and actually escort it to the process and deliver it within a timeframe, then the technology is going to die.

Khailee: The third dimension to consider is the market. There is a lot of great technology in Israel, Taiwan and other parts of the world, but how do we distribute them to the markets that need those? The biggest risk of VCs is to not take the third dimension of market into consideration. For example, there is a VC in South East Asia who wants to invest in a robotics company in Norway, but how would the VC bring that deep tech to penetrate the market in Asia? Sometimes, the VCs are not fully aware of the opportunity in other market that they might not be considering.

Keeping all these risks in mind, what could a successful deep tech company look like?

Chair of the debate

Paul: Now we are talking about how to mitigate the risks to allow investors to come into play. Lots of government in SEA are creating programs to support deep tech like Thailand 4.0, Malaysian government and Singaporean government agenda. Probably one of the areas we have to tackle in order to build this really great deep tech ecosystem is to create the right environment to attract talents to come and work; how do we attract those Thai PhDs to come back to Thailand and perhaps teach the next generation? Deep tech is not just about startups, but importantly include investors and governments. Government is the key, to raise the barrier for smart people to do cool stuff and do good for the society. The challenge is, besides giving them incentives, can we give them the space to fully leverage their knowledge and talents to fully create an impact in Thailand?

Norases: To attract people to Thailand, we need to have strong impact and an open-minded culture. Often time, Thais who go study abroad come back home only to experience a culture shock. In order to excite talents to Thailand, a balanced working life and diversified culture are important key elements.

Esther: I agree on that point. Consider Israel, which has the network and rich R&D community. If Thailand can do the same, say have Google Thailand or have something really cool that is “Made in Thailand”, that will spontaneously attract those talents back.

Khailee: Even if these are fulfilled, I don’t think the people/market really matter. We need more commercial entrepreneurs in order to implement these and strong commitment to have these actions executed.

Conclusion

Deep tech has certainly shown notable potential for the future of advancement, but this might not be the case when seen through the eyes of investors. The bottom line is: will deep-tech make money? Even if these technology can bear an eminent positive impact for the society, investors often scrutinize whether the impact is worth the time, effort and resources it will take. Another challenge is also on the substantial implementation and commitment to sustain the application of the deep tech. Nevertheless, deep tech is too broad of a topic to be cutthroat determined as positive or negative. Building a company that will change the world will never be an easy task. So, if we don’t build it now, when?

What about you? Do you think deep tech investment carries more rewards or risks? We’d like to know your thoughts!

A journalist who loves writing about business, startup, and tech for Techsauce Global. Catch me hopping around South East Asia and China or reach out to me at vanessa@techsauce.co

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