From quantum computing to semiconductors, the UK has a strong deep tech sector. But what will 2023 hold for the deep tech industry amid a looming recession and more cautious investors?
Deep tech is a broad subcategory that includes everything from AI to cleantech. According to Tech Nation, UK deep tech investment has increased 33x since 2011, topping $8.5bn in 2021. Deep tech companies are usually more research-intensive and tend to have a longer time to get to market – but they have the potential to create truly revolutionizing technologies.
Here’s what four industry experts predict for UK deep tech in 2023.
More funding for deep tech startups in 2023
“With the release of ChatGPT, Northvolt becoming one of the most valued European unicorns, and SpaceX making headlines and winning contracts with their Starlink satellite network, we finally have early examples proving the power of deep tech at scale.
“What seemed like crazy moonshot projects are now bringing to market transformative technologies and new infrastructures, as well as, crucially, financial returns for early backers.
“We now need to scale funding opportunities for the deep tech entrepreneurs and 2023 can be a great year for that. More investors will need to join us early deep tech backers, but at least now we have examples to point at for others to see.”
– Francesco Perticarari, deep tech angel and founder of Silicon Roundabout
Compliance, geo-political developments and economic stress
“Next year, deep tech trends will be defined by three key challenges: compliance and regulation, geo-political developments and economic stress.
“The rapidly changing regulatory landscape is placing pressure on owners of operational technology (OT) to better plan, prepare and build defenses to strengthen their resilience against cyber-attacks. Critical technologies such as dynamic physical network segmentation (DPNS) use an emerging field of innovative hardware air gaps, making businesses a harder target to exploit. Such solutions are also becoming vital for operators of critical national infrastructure, in the face of espionage linked to geopolitical tensions.
“Finally, in light of the ongoing economic crisis, many OT owners are being forced to connect their digital assets to legacy networks in order to realize efficiencies. This will require the deep tech industry to react quickly to mitigate the risks involved in assets being physically connected to the internet when not in use.”
– Stephen Kines, COO of Goldilocks
‘Alternative’ quantum computers
“The most striking feature of 2023 will be a ramp-up in innovation and possible disruption within the quantum computing market. New players will enter the market with alternative approaches towards quantum computing. The aim of these newcomers will not be to solely achieve universal computing, but rather more specific computing that can be delivered in a shorter timescale.
“2023 will see a comparison between public and privately owned quantum companies. Public companies will continue to put their capital to work but at the cost of the short-term attention of investors. While they and the rest of the industry push to meet meaningful technical milestones they will only have partial success in shrugging off the short-term pressures to validate the business.
“Geopolitics will continue to shape the quantum computing industry and this shaping could reach a fever pitch. As the race is on to develop quantum computers to gain a strategic lead in cybersecurity, intelligence operations and the economic industry, we should expect increasing restrictions between them to try and limit technological exchange.”
– Richard Murray, co-founder and CEO of ORCA Computing
Long awaited semiconductor strategy
“At a global level there are going to continue to be challenges around geo-political tensions and supply chains, but here this is driving renewed focus on the UK’s semiconductor strategy. It is clearly on the government’s agenda and it will be critically important to deep tech startups like ours that the government announces its strategy as soon as possible.
“If we can get the focus and investment support right, I expect to see major opportunities for UK and EU deeptech companies – particularly those delivering a products or services that improve efficiency, sustainability and supply chain resilience.
“As a champion of photonics, I expect to see significant opportunities for Phlux in robotics (eg LIDAR for factory automation and navigation), climate tech (eg sensors for monitoring greenhouse gas emissions) and optical communication systems.
“Over the next 12 months, we plan to invest heavily in R&D and building our team to deliver new products into these markets.”
– Ben White, co-founder and CEO of Phlux Technology