Catching The Next Wave Of Investment Opportunity: Three Misperceptions About Deep Tech That LPs Need To Forget

In 2016, Mubhij Ahmad and Timothy Day were finishing their graduate studies at UC Berkeley and struggling to get resources to support early validation of their work: developing a novel treatment for colon cancer and other diseases that could deliver gene therapy via a pill.

At the time, Patrick Scaglia and Alic Chen were running CITRIS Foundry, which they had launched as UC Berkeley’s innovation hub. Excited by Ahmad and Day’s vision, they gave the two scientists a $5,000 grant, which enabled them to run their first experiments on pig intestines.

With proof of concept, Ahmad and Day launched DNAlite Therapeutics and went on to secure $1.25 million that same year. They’ve since raised upwards of $4 million and are preparing for their series A.

What’s noteworthy about this example is not just how a science-based “deep tech” start-up is revolutionizing medicine. It’s that its growth timeframe isn’t that different from that of a traditional software start-up.

Because, while deep tech ventures certainly face market and technology risks, these risks are often misunderstood by the global investment community.

So although the amount of capital flowing into deep tech has quadrupled — from $15 billion in 2016 to over $60 billion in 2020 — it’s still a small niche compared to the estimated $1.9 trillion in PE, VC and growth capital.