Phystech Ventures identifies top 10 most promising areas for deeptech investments

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Phystech Ventures, a VC firm that has been investing in deeptech since 2013, has prepared a comprehensive analysis on the performance, main trends, and key players in the industry, titled the "Deeptech Outlook 2021". 

The large-scale study covers 10 sectors that investors have identified as the most promising areas in deeptech, offering breakthrough technologies, exciting growth numbers, and notable investment opportunities in AI/ML, quantum computing, cybersecurity, genetics, bioinformatics, neuroscience, food/agro tech, energy, mobility, and space. 

Reputable industry sources show a four-fold rise of investments in deeptech between 2016 and 2020, while USD60 billion was invested in this sector in the last year alone. Growth in the number of scientific papers in selected deeptech niches signals increased R&D activity. This is mirrored in the fact that there was a 5 per cent increase in protected IP filings in 2020, despite the pandemic. Europe has so far published the largest number of scientific papers on deeptech, totalling 50,000 papers, and accounting for 31 per cent of all total publications. This is then followed by the US, which accounts for 28 per cent (35,000). In terms of funding, the USA and Europe have invested in deeptech at a three-to-one ratio. The UK currently leads Europe in deeptech investment.

Investors predict that a new era of AI hardware is beginning now. Specifically, Phystech Ventures suggests paying attention to startups related to neuromorphic chips, as they provide 20 times more computing power than modern top-end GPUs. For cybersecurity, experts recommend focusing on projects related to holistic cybersecurity, post-quantum cryptography, and data privacy. More than 35 billion connected devices are now active as of 2021, representing about 35 billion potential gates for cyber attacks. 

Life sciences is one of the hottest niches, and also received an extra boost during the  Covid pandemic. The first gene-editing decacorns were born in the last 12 months: Intellia and CRISPR. Intellia also reported the first genome editing in humans in June 2021. Moderna monetizes its mRNA delivery platform, with its company valuation consequently skyrocketing from USD7 billion in 2019 to USD126 billion as of now. Illumina, a bioinformatics company specialising in genome sequencing,  is now valued at USD70 billion. Moreover, the cost per human genome sequenced has dropped 10 times in the past six years.

In conducting this study, industry deeptech experts consulted open sources, industrial reports and databases (Pitchbook, CB Insights, Scopus, Google Patents), etc. The investment activity was further evaluated by the Phystech Ventures team. The study was conducted in June-July 2021, and covered the development of deep technologies over the past 10 years.