Here’s what we’re looking for in the deep tech space

Our Partner Paavo Räisänen explains our deep tech investment approach.

Maki.vc invests across industries, but we have a sweet spot for deep tech upstarts making scientific advances. Why? We believe that industrial deep tech solutions can play a major role in solving the world’s most important and challenging problems. After working closely with companies who superfit the bill like IQM, Spinnova, Volare, Onego Bio, Everdye, and more, we know that sustainability is critical in this equation.

The concept of deep tech is becoming conventional, but what we’re after runs deeper than just ‘tech’. So, I want to outline our expectations for founders in the deep tech space. Here’s what we’re looking for.

1. Radical breakthroughs

The world is full of technology-enabled efficiency improvement opportunities and every step towards long-term targets counts, such as a carbon-neutral world. Novel technologies providing only incremental improvements can be however difficult to push through because they’ll never get top management’s attention and middle management in industrial settings are usually risk-averse.

We’re after ventures planning to shake up and overhaul entire industries, especially those averse to change. That’s why we are searching for cases that can radically change the way things are done by rethinking the whole industrial logic. One great example is Volare, who takes food industry side streams and (instead of biogasification) upcycles them to valuable proteins, lipids, and fertilizers. The result: protein production where CO2 equivalent emissions per ton are only 1/45 that of soy.

2. A strong technical foundation

A common challenge of the deep tech cases is their time-to-market, which is not always aligned with the traditional 10-year lifecycle of a VC fund. Problems can occur if a company's R&D is more R and less D at the time of the VC investment – especially because the time required for research is even harder to estimate than the time required for development.

We’re looking for teams who have a strong technical foundation: teams with solid tech experience and/or access to novel IP that is based on several years of research. So, even though we invest in deep techs in a very early phase, we do expect a credible background from the technological problem you are solving. As an example, some members of the team behind our quantum computing case, IQM, had more than ten years of experience in quantum research and access to IP that had been developed at Aalto University at the time of our initial investment.

3. Combination of technical & commercial expertise

Often deep tech startups focus on technical expertise and are sure to onboard a strong CTO very early on. This is perfectly fine, but having equally strong in-house, commercial know-how is extremely important too. And if you haven’t yet found your commercial talent(s), we’re happy to help you get there, we just want to see that you understand the importance of commercial expertise. Since too often we have seen research-based teams that are world-class in technology but haven’t kept the bar high enough for their first commercial recruit.

So, the ideal startup team would have a sound commercial profile, someone who is business savvy and knows the industry and customer base inside out. Onego Bio is a spot on example of a founding team where CEO Maija Itkonen (creator of pulled oats) combines her consumer product experience with CTO Christopher Landowski’s precision fermentation expertise to take on the last frontier of entirely animal-free foods.

4. A solid position in the value chain

We’re looking for entrepreneurs who want to keep their destiny in their own hands and build a solid position in the value chain: selling and delivering a full product or solution to their customers. If you’re redesigning an industrial process (like Spinnova, Volare and Onego Bio are doing), then you probably need to ramp up at least the first factory yourself.

Many deep tech cases are planning to use business models where they’re selling their technology via licensing business models. Sometimes it might make sense, but when you’re licensing your technology out, you’re not in the driver's seat anymore and your destiny depends on the activities the licensing counterparty does and they might just drop their interest at any point to push your technology to the market.

5. Deep customer and market understanding

You might be on the verge of a scientific breakthrough but if you’re unsure about what it will be utilized for or who it will help, the next steps will get difficult. To build a solution that can stand out from the competition, drive revenue and make a real impact, you need a clear and deep understanding of your customers and their needs.

Too often we’ve seen cases where a new technology is looking for customer problems it could solve while it should be the other way around. As an example, the founders of Altum Technologies first identified the problems with industrial fouling and then started to find the right technology to solve it with the help of a team from the Department of Physics at the University of Helsinki.

6. A distinctive brand

At Maki, we see a strong connection between deep tech and brand, because in the long run, a strong brand and reputation are at least as important for customers as your technological advantage that brought the company to life in the first place. That’s why, on top of your technical capabilities, we expect you to understand why your brand exists, be able to explain it to others, and show you are ready to invest in it – simply put, be brand-driven.

This is how we know you have the potential to be category-defining and future-proof. For example, Spinnova is embodying exactly this: they are a great example of a deep tech venture that has built a truly distinctive brand and value proposition that speaks to their customers and partners.

At Maki, we’re also big fans of cross-portfolio collaboration. We like to make use of existing know-how from a specific industry to support the next upstart breaking into the same space. And we already have several successful cluster examples in our portfolio, including the textile industry (Spinnova and Everdye), alternative proteins (Volare and Onego Bio), and quantum technology (IQM and Quanscient).

We’re constantly looking for new additions to our existing clusters and keeping our eyes open for opportunities in industries where we haven’t invested yet. If you feel you tick these boxes, I’d be happy to hear from you: paavo@maki.vc.