The industry is constantly changing the way we think about technology, and the market is growing. According to IndustryARC, the deeptech market size is estimated to reach $714.6 billion by 2031, growing at a compound annual growth rate of 48.2% during the forecast period 2025-2031.

The market is being driven by increasing research and development investments that are fuelling industrial innovation. Rising investments and strong government support have further accelerated this growth, fostering advancements in artificial intelligence (AI), machine learning (ML), and quantum computing.

The term deeptech sounds broad, but it refers to businesses and innovations that are based on profound scientific and technological advancements. Unlike traditional tech startups that may focus on software or app development, deeptech ventures require significant research, development, and time to reach commercial viability. These companies operate at the intersection of science, engineering, and entrepreneurship, tackling problems that cannot be solved with incremental improvements to existing technology.

The funding landscape

Deeptech is seeing tremendous success in its funding journey, with funding rounds larger than other sectors, on average. In 2024, deeptech attracted significantly more funding than any other sector. According to the 2025 European Deep Tech Report from dealroom, deeptech received $15.1 billion in funding, followed by healthcare/life sciences at $8.7 billion, fintech at $8.5 billion, and enterprise software at $6.6 billion.

The sector has also seen resilience in the funding space. While regular tech is down 60% from its 2021 all-time highs, deeptech is down only 28%. The rate of innovation within the space is attracting more investors to fund these up-and-coming technologies.

The UK deeptech ecosystem receives a strong volume of private investment, with annual VC funding exceeding £5 billion each year since 2020. In the first half of 2024, deal values reached £3.6 billion across more than 500 transactions. An increase in Q2 suggested that funding remained on track with the previous year's activity. This is according to statistics from Royal Academy of Engineering State of UK Deep Tech 2024 report.

The deeptech sector is presenting a significant opportunity for investment in female-founded startups. According to Female Foundry’s Female Innovation Index 2024, 1,196 European female-founded startups raised €5.76 billion via 1,305 deals in 2024. This marks a 12% drop from the €6.56 billion that was raised in 2023, but this decline is also in line with the broader decrease in the deployment of venture capital funding across European companies of all genders, which is an 11% decrease.

According to the index, 25% of the 50 largest financing rounds of 2024 raised by female founders went to AI-driven startups. Also, 33% of all of the venture capital that was raised in 2024 by female founders in Europe went to deeptech startups, which is 2% more than gender-agnostic startups.

More deeptech statistics from the index are 81% of the 50 largest financing rounds of 2024 raised by female founders went to those with scientific backgrounds. Synthetic biology (€282.4 million), Generative AI (€221.8 million), and drug development (€169.9 million) were the top- funded areas of deeptech by female-founded companies in 2024.

Key industry developments

Within the deeptech industry, there have emerged some key sectors that are currently in the spotlight and moving the industry forwards.

Quantum computing

Once confined to theoretical research, quantum computing has started showing practical applications. Companies like IBM, Google, Microsoft, as well as startups in the field, have made significant strides in improving qubit stability and error correction. Governments worldwide have also recognised its strategic importance, leading to increased public-private partnerships in quantum research.

Most recently, Microsoft has unveiled the Majorana 1, a quantum chip that promises a significant leap forward in the development of large-scale, fault-tolerant quantum computing. The company claims that this breakthrough could accelerate the arrival of practical quantum computers from decades to just a few years.

Biotechnology

The intersection of biology and technology has unlocked new opportunities in healthcare, agriculture, and sustainable materials. Lab-grown meat has moved closer to mainstream adoption, while synthetic biology solutions for carbon capture and bioplastics have gained regulatory traction. Startups are increasingly partnering with pharmaceutical companies to accelerate drug discovery using AI-driven modelling, as well as developing modern technologies to aid in the curing of many diseases.

Artificial intelligence

AI remains a core enabler across the deeptech industry. In healthcare, AI-driven diagnostics and drug discovery have shortened research cycles. In materials science, AI is being used to predict and design new materials with unprecedented properties. AI is also making strides in energy technologies, where it is able to optimise grid management, predict equipment failures, and support the development of next- generation renewable energy systems. However, AI regulation has tightened, with governments introducing new compliance frameworks to ensure ethical and responsible deployment.

The challenges facing the industry

Deeptech holds immense potential for innovation and societal impact, but it doesn’t come without its challenges.

High R&D costs

Deeptech ventures demand extensive capital and considerable time to achieve commercial viability. The development of advanced technologies such as quantum computing and biotechnology requires years of research and infrastructure investment before tangible results can be realised.

Even though deeptech is one of the highest invested in sectors, this financial barrier can deter investors who prioritise quicker returns, making it challenging for deeptech startups to secure consistent funding throughout their development cycles.

Regulatory hurdles

Deeptech innovations frequently operate within highly regulated industries such as healthcare, energy, and aerospace. Navigating these regulatory landscapes can be a daunting task, often slowing down the approval and adoption of innovative technologies.

Talent shortages

The deeptech industry relies heavily on a workforce with highly specialised skills. Areas like quantum computing, AI ethics, synthetic biology, and advanced materials science require expertise that is not only rare but also in high demand. The current educational pipeline struggles to produce enough talent to meet the growing needs of the industry. Additionally, competition for skilled professionals from academia, established companies, and emerging startups exacerbates the talent shortage, creating a bottleneck for growth and innovation.

The future of deeptech

The deeptech industry remains one of the most exciting and impactful areas of innovation in the technology space. As scientific breakthroughs continue to translate into real-world applications, the sector will continue to drive economic growth and address global challenges.

However, commercialisation remains a key hurdle, and companies that successfully bridge the gap between research and market adoption will define the next wave of deeptech success.

This article originally appeared in the March/April 2025 issue of Startups Magazine. Click here to subscribe