How can we reap the rewards of the Deeptech revolution? .

We are at the beginning of a tech revolution, let’s make sure we can reap its rewards. 

2023 has seen incredible growth in the Deeptech industry. 

However, growing global instability is undoubtedly holding back the pace of sector innovation and investment. 

The fragility of the world order is only too apparent. Rising levels of conflict in all corners of the globe and continuing economic challenges are impacting a range of industries, muting the appetite of investors. 

But we know that times of crises can often drive innovation. So how will the Deeptech sector evolve during 2024 in response to increasing global uncertainty?

AI & Quantum

2023 was the year AI entered the consumer consciousness. 

Over the next year, AI will continue to grow, with Large Visual Models and Large Language Models set to be massive components of a productivity revolution. 

It’s clear we have not yet even scratched the surface of potential real-world-applications of AI. Yet this year, we saw world leaders and industry experts gather to discuss its future. Led by the UK, the global AI summit aimed to commit to a basic set of principles that countries will follow as legislation and regulations are set.

In reality, we are only just beginning a decades-long debate, one where we will need to strike the right balance between ensuring safety and avoiding regulation that will stifle innovation. If we can lean into AI’s possibilities and challenge our often risk-adverse way of thinking, then we will reap the rewards as a society.

Quantum research holds as much potential as AI but is earlier in its journey. Over the coming year, we will see quantum technologies undergo a period of continued and intense development.

2023 marked the highest ever investments into UK quantum start-ups, with Quantum Motion Technologies securing over £40m and Oxford Quantum Circuits in the process of raising $100m. But the sector has further to go before we start to feel a material impact of using it to tackle today’s issues.

Augmented Reality

The way humans interact is changing. The pandemic accelerated this, with more of us communicating online rather than face-to-face and increasingly shifting from the physical to the virtual world.

Apple’s augmented reality headset and Metaverse’s progress highlight how we are moving away from traditional modes of interactions between humans and machines.

Does this spell the end of the use of keyboards, themselves based on typewriters dating back 150 years? Perhaps.

What we are looking at is essentially the future of the internet where this change takes it from 2D into 3D. And with it, a far greater richness of data immersion and display, as well as a richer, more intimate and personal online interaction. The possibilities for our work, social and learning lives are almost infinite.

Computational power 

Our demand for the digital world has physical ramifications. Advances in AI, quantum and analogue computing may bring broader capabilities and much greater efficiency, but our demand for processing power has never been greater.

To cope with this acceleration, infrastructure must evolve. Remember when streaming services throttled movie quality for the whole continent at the beginning of the lockdowns in 2020?

If the physical is not addressed, we will lag behind and be unable to process the amount of data required to match our demand.

So, I expect we’ll see a major resurgence of investment into computing infrastructure during 2024. 

And considering growing instability, we will see organisations put even greater emphasis on how data is protected and secured. Cloud computing will likely come with increased pressure to prove its security credentials. 

Investment trends

To keep pace with these demands, government and businesses need to ensure investment is channelled into the right places. Get it right, and we can maximise the huge benefits these technologies can bring to society, the economy and the planet.

Investment also ensures we continue to attract the best talent to those places, which feeds the development cycle. 

Some countries, like Germany, are investing in the right infrastructure (such as chip fabrication) at the right time to keep pace with this. But the UK lags behind. 

Take internet access. Over the last decade, the UK has failed to build enough critical infrastructure to keep pace with network demand, and just recently, politicians scrapped plans to build a new data centre in the South of England. We now rank in the 30s of the international league table of internet speeds, which means we cannot take advantage of everything new technologies have to offer. 

The UK has the potential to assert itself in this domain and truly stand out as a Deeptech champion. However, a lack of investment and understanding of the need for practical infrastructure threatens this ambition. 

Conclusion 

Despite global uncertainty and macroeconomic trends, we’ve seen much growth in the sector over the past year. Indeed, IP Group’s Deeptech portfolio totalled £200 million as of June 2023. 

With the UK’s universities, spin outs and scale ups developing more ideas every month, the pace of innovation shows no signs of slowing. 

But as the world becomes increasingly challenging for early-stage companies, it’s important the UK is not left behind. 

It will take a collective effort to unleash Deeptech’s full potential to facilitate future growth. We need the right level of capital and operating environment to succeed, whether that’s having the correct infrastructure or the right regulations in place.