Meet 23 Deeptech Startups Poised to Defy the Market Downturn, Per VCs

On Jul 28, 2022

Europe’s deep tech sector is finally getting its due.

The sector has been shunned for years due to its supposed inability to commercialize moonshot ideas, but now startups in the region are securing funds from investors and governments betting that the region can deliver game-changing tech.

Deep tech startups in the bloc were worth $711 billion, around 700 billion euros, by the end of 2021, according to Dealroom and Sifted data. Investors piled into startups like Swedish battery maker Northvolt, which raised $2.75 billion, and Britain’s robotics firm CMR Surgical, which lured $600 million in a round backed by SoftBank.

Adam Niewinski, cofounder and general partner at OTB Ventures, said that deep tech has proven more resilient to the economic downturn than other industries like rapid delivery and NFTs – both of which have reported aggressive consolidation or collapsed valuations.

He said this was partly due to the fact deep tech startups built their foundations on top of “unique tech” that is “hard to develop, hard to copy,” and often bring real disruption to the industries they aim to overhaul.

“I would say food delivery with an app it’s not real tech, it’s an execution business with an app, and such an app like a team of super smart students can quite quickly develop,” he said. “If we are talking about a real AI engine or space technologies or quantum computing, this is really unique.”

Governments have also recognized the uniqueness of such technology too with the European Union in the process of drawing up a Listing Act, which will make it easier for startups to go public in the region.

Insider asked VCs which deep tech startups in Europe hold promise and are poised to bring radical innovation to the market.

Below are the 23 deep-tech startups they named, in alphabetical order.

Algorithmiq

Picked by: Haakon Overli, cofounder and general partner, Dawn Capital

Relationship: Non-portfolio company

Headquarters: Helsinki

What it does: Algorithmiq combines software with the power of quantum algorithms to find solutions to problems in life sciences. In particular, it aims to do this by accelerating the time it takes for pharmaceutical companies to bring life-changing drugs that tackle diseases to the market.

For Overli, Algorithmiq’s approach to so-called “quantum chemistry simulations and noise mitigation” marks it as a standout startup.

In short, this is the use of quantum computers to analyze and predict the path of chemical reactions while minimizing anything that might interfere in an accurate calculation. It’s an approach that has garnered the attention of the White House, as well as the Brigham and Women’s Hospital, an affiliate of Harvard Medical School.

“That’s why I’m excited by Algorithmiq, which is harnessing the potential of quantum computing and applying it to life sciences to solve major challenges big pharma companies face, including a drug discovery process that typically takes 10 years and costs $1bn,” Overli said.

Bramble Energy

Picked by: Joseph Zipfel, chief investment officer at SFC Capital

Relationship: Non-portfolio company

Headquarters: Crawley

What it does: Bramble Energy aims to make hydrogen cheaper and more scalable through the use of low-cost fuel cells that can convert hydrogen into electricity.

The startup, which was spun out of Imperial College London, raised £35 million ($47 million) in February. Bramble’s fuel cells can be developed on production lines for printed circuit boards unlike existing fuel cells, making their products much quicker to build at a vastly reduced cost.

“Hydrogen is poised to play a huge role in the future of renewable energy, but at the moment, it is too expensive to scale and Bramble Energy might just have the answer,” Zipfel said.

Breathe Battery Technologies

Picked by: Amelia Armour, partner at Amadeus Capital Partners

Relationship: Non-portfolio company

Headquarters: London

What it does: The growing interest in batteries in the race to find technological solutions that address the climate crisis has brought a key issue into focus: battery degradation.

Chemical processes that take place inside batteries lead to degradation that worsens performance, often leading manufacturers to compensate by loading battery packs with an abundance of cells.

To address this more expensive way of producing batteries, Breathe Battery Technologies, an Imperial College London spinout, has developed battery models that can provide insight into a battery’s health and adapt the charging processes of an individual battery. Its models can also be used with existing lithium-ion batteries.

“This improves performance in terms of the charge time, lifetime, and safety of the battery, and the technology can be used to improve the standard of batteries in everything from consumer electronics to electric vehicles, which is a rapidly growing market,” Armour said.

CellVoyant

Picked by: Pierre Socha, partner at Amadeus Capital Partners

Relationship: Portfolio company

Headquarters: Bristol

What it does: CellVoyant is a biotech startup that aims to put AI at the heart of what it does: creating stem-cell-based therapies for chronic diseases.

By using live cell imaging, its AI aims to predict and optimize the way stem cells divide in order to “controllably manufacture any cell and tissue in the body at scale”, according to the firm.

Eigen Technologies

Picked by: Haakon Overli, cofounder and general partner, Dawn Capital

Relationship: Portfolio company

Headquarters: London

What it does: Eigen Technologies speeds up the process of pulling out precise information from documents with its no-code AI platform, allowing its clients to draw more information out from a myriad of sources to inform decision-making in a smarter way.

“Eigen allows users to extract data quickly and precisely from their documents in a fraction of the time and cost it would take for humans or previous generations of AI tech to do so,” Overli said.

According to Overli, Eigen’s AI, which is currently used by the likes of Goldman Sachs, ING, and BlackRock, only needs a handful of data points to be trained, giving it an edge on competitors that need vast volumes more of data.

Encord

Picked by: Anna Khan, general partner at CRV

Relationship: Portfolio company

Headquarters: London

What it does: Encord was brought to life in London in 2020 by a founding team of quants, physicists, and computer scientists who felt there was a serious lack of tools that prepare data for computer vision applications. Without thoroughly prepared data, the use of AI in such applications can be severely hindered.

The startup has developed a means of automating and streamlining the various tasks involved in preparing what it describes as “quality training data” that is fed to AI systems.

“What gets me excited is when a technological shift is right at the precipice — where it’s still not fully formed and may require you to still squint a bit to see the future. For me, this shift is the state of AI and computer vision,” Khan said.

“Encord is doing this by de-FAANGing AI and making access to state-of-the-art tooling and infrastructure for computer vision available to companies beyond Silicon Valley.”

First Light Fusion

Picked by: Moray Wright, CEO at Parkwalk Advisors

Relationship: Non-portfolio company

Headquarters: Oxfordshire

What it does: First Light Fusion wants to change the way fusion power is approached.

As one of the front-running ideas for producing low-carbon electricity, finding more efficient and cheaper ways of managing fusion power has become a priority.

The startup aims to do this with what it calls a “projectile fusion” approach to produce electricity via a process known as inertial fusion.

In short, this process currently involves using a large laser as a “spark plug” according to First Light Fusion, allowing small amounts of fuel to be injected and burned. The startup’s approach takes a different turn, instead triggering the reaction with a high-velocity projectile instead.

Glaia

Picked by: Tim Mills, managing partner and founder at ACF Investors

Relationship: Non-portfolio company

Headquarters: Bristol

What it does: The University of Bristol spinout is taking on the agriculture sector with technology that looks to enhance the productivity of crops to meet the rising demand for food globally as the world’s population races towards almost 10 billion by 2050.

Its technology involves something known as sugar dots, a synthetic version of naturally occurring nano-materials that allow plants to “harvest light more efficiently”, increasing crop yields in turn.

“Glaia is a company that I love,” Mills said. “It’s deep tech that’s genuinely trying to make the world better.”

Humanising Autonomy

Picked by: Joseph Zipfel, chief investment officer at SFC Capital

Relationship: Portfolio company

Headquarters: London

What it does: Humanising Autonomy wants to make sure a future world full of autonomous vehicles is safe for pedestrians too. It has developed computer vision technology that analyzes the way people use streets and react to vehicles.

The startup’s aim is to do this in an ethical way. It says its solution involves bringing together ideas from “behavioral psychology, statistical AI and novel deep learning algorithms to enable human-centric decision making” for automated systems.

In practice, this means its technology captures the most essential elements of human actions from video footage it captures in real-time while anonymizing who those individuals are to ensure the privacy of the people in a video.

ICEYE

Picked by: Joseph Zipfel, chief investment officer at SFC Capital

Relationship: Portfolio company

Headquarters: Finland

What it does: Space-tech startup ICEYE is building and operating a constellation of satellites that can capture data on natural catastrophes, providing almost real-time imagery that can then inform decision-making for both governments and the private sector.

ICEYE, which has raised around $313 million since 2015, has what it calls a synthetic aperture radar instrument that can be used to capture data even when there are intense clouds and other things blocking the way – something that traditional cameras can struggle with.

Kuano

Picked by: Tim Mills, managing partner and founder at ACF Investors

Relationship: Portfolio company

Headquarters: London

What it does: Kuano’s mission is nothing short of redefining the way drugs are discovered by using both AI and quantum computing in tandem.

The London-based startup simulates the enzyme reactions that take place that it says are “governed by complex quantum mechanical laws”, and then applies its technologies to give a level of detail to drug interactions inside the body that previously wouldn’t have been possible, enabling the development of drugs that are much more effective.

“The company uses quantum mechanical simulations combined with AI and deep learning to explore trillions of enzyme reactions, ultimately identifying inhibitors which can then be used as templates for effective, low-toxicity drugs,” Mills said.

MeVitae

Picked by: Joseph Zipfel, chief investment officer at SFC Capital

Relationship: Portfolio company

Headquarters: Oxford

What it does: Avoiding bias when hiring has become an increasingly important consideration for companies. Oxford-based MeVitae aims to go a step further by helping companies hire diverse talent that fits their culture too.

MeVitae’s AI helps companies do this by anonymizing more than 20 characteristics such as gender, age, and ethnicity.

“Post pandemic, there is a huge opportunity to use AI when redistributing the new supply of talent in a non-biased way that helps improve diversity and inclusion across all sectors,” Zipfel said.

Mindtech Global

Mindtech's Chameleon system fills in data gaps — Mindtech ensures AI has relevant data to be trained.

Picked by: Miles Kirby, CEO at Deeptech Labs

Relationship: Portfolio company

Headquarters: Sheffield

What it does: Many companies looking to use AI to its maximum potential due to a lack of tools to fill in data gaps. Mindtech aims to rectify this with its Chameleon platform that creates “relevant data” to train AI.

According to Kirby, there is currently a scarcity of training data in the machine learning space, particularly around data that covers “edge cases,” which in turn holds back the performance of machine learning algorithms.

“At Deeptech Labs, we invested in Mindtech because they are addressing this gap,” Kirby said.

“They have the tools to evaluate datasets, determine what is missing, and then generate perfectly annotated data that can be used to train and optimize the performance of these algorithms. We view them as a provider of picks and shovels in the machine learning gold rush.”

Oxbotica

Picked by: Moray Wright, CEO at Parkwalk Advisors

Relationship: Portfolio company

Headquarters: Oxford

What it does: AI experts Oxbotica are putting their technology to use in the automotive industry, aiming to bring autonomous capabilities to vehicles of any size.

The task of developing a universal autonomous driving system that applies to everything from vehicles for goods transportation to carrying passengers has been difficult, though Oxbotica’s ambitions have won it plenty of high-profile backers such as Ocado and BP Ventures, which led its Series B round.

Oxford Quantum Circuits

Picked by: Frederick Hamilton, associate at Oxford Investment Consultants

Relationship: Portfolio company

Headquarters: Oxford

What it does: Oxford Quantum Circuits (OQC) wants to make quantum computing more commercially viable.

Having launched the first commercially available quantum computer in 2018, it has focused its efforts on developing a product that makes it easier to scale the basic units of quantum computing – something that is necessary to make quantum computers useful to companies and governments.

“It’s still early days for OQC, but the team are planting the flag for quantum computing commercialization in Europe and Asia,” Hamilton said. “All the ingredients are there, and I can’t wait to see what the future has in store.”

Paragraf

Picked by: Amelia Armour, partner at Amadeus Capital Partners

Relationship: Portfolio company

Headquarters: Cambridgeshire

What it does: Graphene, a form of carbon first isolated by scientists at the University of Manchester in 2004, has a number of properties that can vastly improve the way many industries operate. Paragraf wants to tap into those properties.

Earlier this year, the startup closed a $60 million Series B round led by US deep tech investor New Science Ventures to accelerate its ambitions of transforming electronics. The startup can develop high-purity graphene products that, according to Armour, have 30-50 times the sensitivity to magnetic fields compared with silicon alternatives, improving the performance of the electronics it is embedded in.

“This is as deeptech as it gets,” Armour said. “The company is a great example of a successful British electronics manufacturer that has managed to use technical know-how and IP to commercialize a technology that will transform a whole sub-sector of tech worldwide.”

PetMedix

Picked by: Moray Wright, CEO at Parkwalk Advisors

Relationship: Portfolio company

Headquarters: Cambridge

What it does: PetMedix is a deeptech startup focused on improving therapeutic care for pets.

Leveraging what it describes as next-generation moncolonal antibodies technology – essentially lab-made proteins tailored to fight specific diseases – it hopes to improve the current options available for treatment.

The startup, which raised a $37 million Series B in September, uses its technology to tackle canine lymphoma, a common form of cancer that affects dogs.

PragmatIC Semiconductor

Picked by: Andrew Williamson, managing partner at Cambridge Innovation Capital

Relationship: Portfolio company

Headquarters: Cambridge

What it does: Arm-backed PragmatIC Semiconductor makes integrated circuits (ICs) that are flexible and considerably cheaper than today’s silicon chips.

The startup, which raised $90 million in a Series C round last year, enables designers to use its ICs to create devices that are tailored to the applications they are targeting in a process that it says massively accelerates the development cycle.

“In the next decade, PragmatIC expects to deploy over 100 fabrication lines globally, with a unique distributed production model, which enables secure and responsive semiconductor supply chains via on-site integration into customer facilities,” Williamson said.

Riverlane

Picked by: Andrew Williamson, managing partner at Cambridge Innovation Capital

Relationship: Portfolio company

Headquarters: Cambridge

What it does: Riverlane bills itself as the “world’s first quantum engineering company.”

That’s because the Cambridge-based startup is hoping to bring quantum computers to the mainstream at a greater speed by building an underlying operating system for them.

According to the startup, whose partners include the likes of AstraZeneca, Merck, and Johnson Matthey, its operating system involves “state-of-the-art verification and tracing techniques,” as well as a low-latency operation that can unblock error correction,

Deltaflow Control enables ultra low-latency operations that unblock error correction – a key facet of quantum computing used to protect information generated by quantum computers from interference.

“Riverlane is making quantum computers useful up to a decade sooner than previously imaginable,” Williamson said.

Satellite Vu

Picked by: Rob Desborough, CEO of Seraphim

Relationship: Portfolio company

Headquarters: London

What it does: Founded in 2016, Satellite Vu’s mission is to become what it calls “the world’s thermometer” by deploying a constellation of satellites that can capture high-resolution thermal data from space.

Its goal is to help address sustainability challenges by using infrared imaging to monitor the thermal footprint of “any building on Earth in near real-time,” according to Desborough.

“Satellite Vu’s constellation will have the potential to measure the thermal footprint of any building on the planet every few hours to determine valuable insights into economic activity, energy efficiency, and carbon footprint,” he said.

Space Forge

Picked by: Adam Niewinski, cofounder and general partner at OTB Ventures

Relationship: Non-portfolio company

Headquarters: Cardiff

What it does: Why build things on Earth when you can build them in space? For Cardiff-based Space Forge, there are several advantages to manufacturing in space, so it has set its sights on finding a way to do just that.

The startup sees things such as gravity on Earth preventing “perfect alloying in metals”, for instance, and believes the planet’s dense atmosphere can be a contaminant for “even the cleanest” of manufacturing processes.

Instead, it wants to harness the environment in space where these issues don’t exist by sending a “rapid, reliable and returnable vehicle” to space to assist in the manufacturing process.

According to Niewinski, replicating the conditions in space on Earth is “really hard,” but taking things to space to be produced and brought back could actually be cheaper. It’s not something he sees happening anytime soon but believes there is a huge opportunity at hand if Space Forge’s technology can find scale.

“We believe this is a super interesting example of deep tech manufacturing, meaning in space manufacturing of super advanced materials. So it’s a mixture of advanced manufacturing and advanced materials in space,” he said.

V7

Picked by: Pierre Socha, partner at Amadeus Capital Partners

Relationship: Portfolio company

Headquarters: London

What it does: V7’s name comes from the notion that the human visual cortex has six generally recognized areas that allow humans to do everything from recognizing shapes to understanding color and motion.

Its aim is to create a seventh area of visual understanding for machines that, in theory, can allow them, in its words, “perceive the world beyond what our brains enable” people to do today.

The startup wants to apply this new dimension of visualization to the world of business, to enable companies to automate any task that requires people to use their sight in fields as far-ranging as cancer detection to precision agriculture.

Wayland Additive Limited

Picked by: Tim Mills, managing partner and founder at ACF Investors

Relationship: Portfolio company

Headquarters: West Yorkshire

What it does: The startup, based in the north of England, aims to make a process known as additive manufacturing far more efficient by applying electron beams to it. The aim of improving the process is to make the 3D printing of metals far easier.

According to Mills, electron beams offer the potential to create components and parts “on-demand”, while offering technical and environmental improvements to the additive manufacturing process.

“Their technology can be used to 3D print metal structures, which until now had been impossible to create, and work with exotic alloys to develop components for aviation, power generation and spacecraft,” he said.

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