For some time the UK, and in particular London, has shied away from producing deep tech startups. Here at Entrepreneur First (EF) we focus very hard on producing deep tech startups and for EF this means startups that are producing defensible technology that can usually be patented. They don’t use off the shelf tech solutions and the value of the company is often built on their technological developments. At the moment this means anything from new approaches to artificial intelligence, such as deep learning and computer vision, or new approaches to virtual reality or cyber security.
One of the factors in the lack of deep tech startups is the lack of technical expertise in the investment community - no-one wants to invest in something they don’t understand. However recent acquisitions in the deep tech space have piqued investors’ interest. Google has been highly acquisitive in the artificial intelligence space, including London based startups DeepMind (for up to £400m in 2014), Dark Blue Labs and Vision Factory, and Facebook owned Oculus recently acquired London based Surreal Vision.
It’s often said that the UK education system produces some of the best computer scientists and engineers in the world. So how can we support more of them to build deep tech startups?
Take more technical risk
Cambridge, with it’s strong university cluster has produced some notable deep tech successes, but beyond this the UK has been lacking. We are working closely with a number of universities and are seeing a pattern where individuals with strong technical backgrounds think that it will be easier to build a tech enabled startup, rather than a deep tech startup. They think building a marketplace would be easier than building on their existing research.
We need to encourage postgraduates, particularly at the PhD level, to take more technical risk. Computer Science PhD graduates don’t realise that there are declining annual returns to their PhD. At the point where they graduate they are more qualified to build a deep tech startup than those who have been in industry with decades of experience.
Universities and investors need to encourage and support them to commercialise their research and work out new applications for it. If you look at Surreal Vision, a startup that creates real-time 3D scene reconstruction technology, it was founded by a team of PhDs from Imperial College.
Engage more expert academics
To be able to build deep tech companies, the founders need different support to your average tech startup. In particular, they need support from academic experts. We’re seeing increased appetite from academics who want to see research converted into products, and who realise the potential of supporting early stage startups.
At EF, with our focus on investing in individuals with deeply technical backgrounds, we are now providing that extra level of support through our Science Partners. This is a group of professors from the top Computer Science departments around Europe. These individuals are involved in, or have founded highly successful startups based on their academic research. They straddle both business and science to be able to support our companies to create technically defensible products that can also be commercialised. Alongside five others, it includes Andrew Davison, Head of the Dyson robotics lab at Imperial College who was the Professor supporting the the Surreal Vision team, and Phil Blunsom, a professor of machine translation at Oxford University and cofounder of Dark Blue Labs, which is now owned by DeepMind.
Pushing beyond acquisition
The next challenge for the UK and Europe is not supporting our technical talent to take more technical risk, but ensuring we have an ecosystem that can support those companies to grow beyond early-stage acquisition targets.