What's Next 2018: Deep tech is not only for the scientists
By Kiran Kaur Sidhu September 4, 2018
- To make it simple, there are three main categories – data, hardware and biology.
- Before investing in deep tech, it is important to who is using the tech and how it’s used
“TOO many people talk about deep tech. There are a lot of buzzwords but, as investors, I group them into three,” explained Khailee Ng (pic), the managing director of 500 Startups, at Digital News Asia’s What’s Next 2018 conference.
500 Startups is a venture capital firm incepted in Silicon Valley that has invested in over 2,000 companies spanning across 60 countries. “In Malaysia, we have invested in 35 companies so far including Grab. We’ve deployed RM24 million into these companies and over four years, the total enterprise value of these companies together is about RM50 billion.”
Explaining the rationale underlying his talk, Ng says: “We are trying to open source ourselves. We want the whole world to be involved in investing and to do it well. So what I am speaking to you about today is also an extension of what we do, which is to teach venture capital as partners with Stanford University.”
Ng’s talk was directed at providing a framework or idea to the audience of how to look at all things deep tech. “A lot of us here in the room today – we are here to make money, reduce costs and understand the nuts and bolts of our businesses. We want to know what technology can help us.”
While apprehension surrounding deep tech usually comes from complexities of terminology and the tech itself, Ng claims deep tech can be categorised into three buckets namely data, hardware and biology.
Tips for investing in deep tech
Before delving deeper into the topic, Ng provided the audience with a gist of his 3 bucket classification. “The first bucket are technologies that manipulate data in very interesting ways – machine learning, artificial intelligence and big data.”
“Next, for IoT, robotics, sensors, virtual reality and augmented reality – these technologies manipulate hardware,” Ng explained. “The third group, like biotech, lifetech and agritech all relates to biological aspects.”
However, Ng was quick to clarify his omission of cryptocurrency and other software-related solutions. “All of the deep tech buzzwords can be pushed in one of these three categories. As for crypto, that is another thing altogether to talk about on another day.”
“Many people ask about apps, e-commerce, marketplace and websites but software is actually not considered deep tech in our books, although it is required to be the interface for some of these technologies,” he added.
Upon providing this framework and setting the context for his talk, Ng remarked “The most important part of the picture is – who is using these types of technology? Typically, most of these technologies are used by businesses that you may own and invest in.”
Before 500 Startups invests in a deep tech company, Ng shared the primary criterion that is assessed. “We want to know whether the technology is used by any businesses to generate and increase its revenue and decrease cost for its customers.”
Ng went on to share some insights gained from investing in deep tech, first of which is that one does not have to be a scientist to invest in deep tech companies. “A lot of the founders of deep tech companies are not scientists either. There are so many non-scientists taking technology and commercialising it by working with others.”
The next lesson Ng imparted was that one does not have to be in Silicon Valley or China to invest in deep tech. “For companies with data capabilities, we find them present in any country we invest in. As for hardware – IoT, robotic and sensors, Taiwan is excellent while Australia and Singapore are good too.”
For biotech, lifetech and agritech opportunities, Ng recommends looking at Hong Kong. “Hong Kong’s regulation is so accommodating of innovation on life sciences that many people move there to create companies.”
“Meanwhile, Indonesia and Malaysia are excellent for agritech. So for those who think you have to be in Silicon Valley because there is no talent elsewhere, you just have to explore and see the full picture,” Ng said.
As for his third and last bit of wisdom, Ng shared “You don’t have to wait. A lot of people talk about deep tech in the future tense but the fundamental technology is already here.”
“The new entrepreneurs are taking these technologies and converting it to business value.” Speaking directly to the business people in the audience, Ng said “If you can work with them, you can even co-create new deep tech companies. You do not have to be a scientist, you don’t have to be in Silicon Valley. You can just be you and create the future together.”