Panel discussions

Understanding the Nuances of Deep Tech

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Deep Tech companies work on technology that addresses problems and are solutions-oriented. We invited a distinguished panel of experts to unravel the nuances of this emerging tech space.

Pravin Shekar, Hon. Secretary, TiE Chennai

We have recently formed a core group in TiE and its objective is to help democratize deep tech; to bring a deeper understanding of its facets to the community and to ensure that we are able to work with the ecosystem of startups and to work with institutions to foster the deep tech growth in the country.

What is deep tech?
Deep Technology (Deep tech) or hard tech is a classification of organisation or more typically a startup company with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. The key technology areas are: Biotech, Robotics, AI/ML, AR/VR, Blockchain, Advanced material science, Photonics and electronics and Quantum computing.

The key application areas are: Lifesciences and healthtech; Food and agritech, where we are trying to use robotics and drones to increase production; Aerospace; Energy and Cleantech; Industrial technologies; Telecom and Infrastructure. The Covid vaccine itself is one of the deep tech projects.

Deep tech and startups
Of course, all startups have to solve a problem but the deep techs look at solving some fundamental problems. 97% of the startups in deep tech domain address at least one of the 17 sustainable development goals (SDGs) of the UN which include removal of poverty, hunger, providing clean energy and smart cities.

The second is, there is always a convergence of technologies and 96% of the deep tech startups have a combination of multiple technologies like AI with robotics.

The third is, they produce products and all of them own a certain IP, which is a very valuable component. The last is, they are part of the huge ecosystem. According to NASSCOM, 12% of the new startups use some of the technologies like AI, ML, IOT, Robotics.

Lakshminarayanan, Co-founder & Emeritus Vice Chairman, Cognizant

Defining Deep tech would be limiting its scope. However, there is a good and popular model that is available to understand all that is associated with research- both fundamental and applied- in the areas of science and technology. It is called the ‘Louis Pasteur’s quadrant,’ as shown in the figure. It is a two by two matrix and simple to understand. On the X-axis, we have the intensity of application and on the Y-axis, the intensity of research. In Quadrant 1 (Top Left), the intensity of fundamental research is very high but there are very limited applications. It is called the Niels Bohr’s quadrant. E.g.: Quantum mechanics, quantum sciences, etc. We have still not figured out ways of applying it in the real world. There are people who chase the truth, like, how did the universe come to be or what is driving nature, through fundamental research. We have institutions in India who continue to do that. TIFR initially promoted that. We have the International Centre for Theoretical Science (ICTS) in Bangalore.

There is a significant amount of research that’s available from these institutions but only some of them find applications. ~ Lakshminarayanan

Then we have Quadrant 3 (Bottom Right) where the intensity of research is low but there is high intensity of application. This is called the Edison’s quadrant. He is the person who was known to have never invented anything but he applied whatever research and science that was available at that point in time, to make a significant impact to society, starting from the light bulb to all the other things that he did.

Quadrant 2: The Holy Grail
The Holy Grail, of course, is Quadrant 2 (Top Right), which is called the Pasteur’s quadrant, where both the intensity of research and application are high. It is called Pasteur’s quadrant because Louis Pasteur did research at the high end and also applied it to almost save humanity. He is a great example for everyone who tries to be in the deep science and technology area.

With this one model, we can correlate all the institutions that we have in India. In Bangalore, we have NCBS – The National Centre for Biological Sciences that does a lot of research and then finds many applications like the Pasteur’s quadrant. Institutions like the IITs and IISC are probably somewhere in the Edison’s quadrant, trying to move up. There is a significant amount of research that’s available from these institutions but only some of them find applications. IIT Research Parks or The Society for Innovation and Development are good examples of institutions that take us to the Pasteur’s quadrant. Companies or startups in this quadrant are very high in research. Their applications can impact billions of people. The most recent example is the Moderna vaccine or the BioNTech vaccine, which has come out of fundamental research on Messenger RNA. It did not come up in one year. They were working on this for the past 10 to 15 years.

Deep Tech companies work on technology that addresses problems and are solutions-oriented. As IIT-Madras’ Dean Prof Kamakoti mentioned, there are a plenty of technologies available with us. We are in a situation of the hammer looking for a nail. We always associate products in deep science and technology areas with big companies, as the investment required is high and it has to be sustained over a period of time. You need patient capital.

Chinnu Senthilkumar, Managing Partner, Exfinity

Deep Techs deal with physical products but I would like to add a small nuanced difference. The product must be able to create disruption. I worked in Intel and dealt in transistor for the first 10 years. I was a hardware engineer and I worked in chip design. In those days, I did not have much of an opinion about software people. I thought it was very simple. But after 15 to 20 years, my opinion changed drastically. The reason is, if you look at any product today, you should tie it to the software or platform ecosystem. That is what Steve Jobs did. In the Apple ecosystem, all the individual components come from various parts of the world or various engineers. Industrialised nations like Europe have been fantastic in individual innovations but when it comes to bringing those innovations together, the US excelled. With deep tech, the more you can bring the product to the platform, the more you can scale it.

I grew up in a small village near Namakkal in Tamilnadu. In the late seventies and eighties, the valve radios were getting replaced by transistors in a big way. Then I worked in San Disk which had come up with memory that completely disrupted the storage medium. Innovation should lead to disruption and production on a scale.

The Role of Ph.Ds
Now, in deep tech, we are talking about AI, ML, AR and VR. Ten years down the road, it will be different. We have invested in deep tech companies. Six or seven of them are founded by PhDs. The product usually comes from a PhD thesis. It gets translated into an idea and it gets scaled. We have a company that has come up with a new battery and is founded by a young PhD who converted his PhD thesis. The point is that many deep tech companies are founded by PhDs but it doesn’t mean that only PhDs can come up with it. We have companies founded by dropouts also. Chennai has a very good deep tech ecosystem. In my opinion, what is probably lacking is the commercialisation part. No matter how much you do with the tech, you have to find a way to commercialise it. For example, this particular company that I talked about which was founded by two Stanford PhDs appointed a CEO with MBA with 20 years’ experience in the semiconductor industry and with techno commercial background. If you have to sell it to the customer, you have to understand the customer’s pain point.

If you want to start a deep tech company, look at the top 4 or 5 big companies in your space, look at their roadmap and see what is missing. Can you address that gap? If they were to acquire your company after five to seven years, what are the metrics they will be looking at? Why would Intel or AMD or Infosys buy me?

The big companies are not able to innovate at the speed at which startups operate. So the innovation must come from startups and big companies have understood that. Most of the big companies have started setting up corporate venture funds because they want to come and invest with deep tech entrepreneurs in Chennai, Bangalore or Hyderabad, because they know that it is the way to keep innovating. At one point, they want to acquire the company. Intel had Intel Capital. Many big companies have a venture arm for this reason. Find out your customer. Why would they buy your product? You have to reverse map it and go bottom up from your technology and also work top down.

If you want to start a deep tech company, look at the top 4 or 5 big companies in your space, look at their roadmap and see what is missing. Can you address that gap? ~ Chinnu Senthilkumar

Rohan Ganapathy, CEO & CTO, Bellatrix Aerospace

According to me, deep tech is turning science fiction into reality, as I come from a space background. We attack problems differently. In 2014, India launched the first satellite to Mars and proudly declared that it cost us less than the cost of making the Hollywood movie Gravity. The per kilometre cost of seven rupees was cheaper than an auto. We disrupted this further and ISRO said that we can go to Mars at one paise per kilometre. There is huge untapped potential but there is no market.

We talk about first mover advantage. I would call it ‘first mover risk’ because there’s a lot of weight you have to carry. Being the first space startup in the country, we had to face this. Now, I am happy to say that looking at us, there are 6 to 8 space focussed companies in India. We are not that old. We set up in 2015. The word software itself was coined for Neil Armstrong’s Apollo moon landing. The lunar module couldn’t be remotely controlled from the earth because light takes a few milliseconds to reach the moon and you can’t do automated landing. So the first codes were actually written for a space application. Space is an amalgamation of every subject. ISRO is not made of aerospace engineers but of computer science engineers and mechanical engineers. Disruption for us is taking everything from every department and putting together and coming up with a solution. The potential is big. Gold is available underneath the ocean. Why don’t we mine it? Because, the cost of mining is more than the value of gold.

Disruption for us is taking everything from every department and putting together and coming up with a solution. The potential is big. ~ Rohan Ganapathy

Similarly, now we are talking about climate change. It is real. We are still class zero in the human evolution. That means, we are dependent on the natural resources for our survival. The next option is go to the moon and mine. The moon is rich. It’s a barren land that is rich in titanium, iron, aluminum and even the future nuclear fuel called helium 3, but what stops us from going and getting it is the transportation cost. That is what we are trying to solve. We have an engine which runs on water as the fuel. Water is available on the moon as well, so you don’t carry a return fuel. You get everything in-situ resource utilization. We saw the potential and we also wanted to disrupt. This is a way to look at deep tech. In Indian perspective, the biggest problem is that people don’t believe. We have to do the technical feasibility study. We have to educate investors and gain their confidence to get money, as our gestation period is longer and we need a little higher capital than any other industry.

How did you come up with the idea of electrics? In your journey of the past seven years, can you talk about the challenges that you faced?

Rohan: Thanks to Elon Musk, space went from being B to G to more of B to B. Today, space is 450 Bn $ industry and has potential to cross 1 Tn $, which itself is a pessimistic number. The world is such a small space today and thanks to space technology, we are all so closely connected. But it is still expensive to go to space. To put anything to space, it still costs somewhere around 40,000 $ per kg.

A good satellite would weigh somewhere in the order of one ton. So imagine the cost required to send a satellite to space. Elon Musk answered this question by reusing the rocket. Our rocket is as complex as an airplane. An airplane can’t fail because we are travelling. That level of reliability is also needed for a rocket, because we are putting a very expensive hardware to space. But what we do, we end up throwing all the stages back into the ocean. It is expendable in nature. Elon Musk opened up a Pandora’s Box by reusing.

What else can be done? We came to know that the satellites carry very little payload. Even if they weigh 5 Ton, only 200 kg is the payload and the payload must give a return on investment. Why does it weigh 5 tons? Because, to go from low orbit to 36,000 kilometres, it needs fuel to go there.

We wanted to solve this problem. Just like the EV revolution going on the road, we wanted to electrify space. The electric propulsion doesn’t need so much of fuel. From 2000 Kgs, we only need 180 kgs of water to go from point A to point B. That’s the idea with which we started Bellatrix.

ISRO was not really open to private industry coming up in an area where they are the king. The transition took place in the early 2000 in the US. In India, it was still not the case. But we had a solution which ISRO wanted. That is how, ISRO ended up becoming our first customer.

We wanted to solve this problem. Just like the EV revolution going on the road, we wanted to electrify space. The electric propulsion doesn’t need so much of fuel. From 2000 Kgs, we only need 180 kgs of water to go from point A to point B. That’s the idea with which we started Bellatrix. ~ Rohan Ganapathy

The next problem was with investors. You might have a good technology and deep tech is not just about tech. It is also about regulations. There is no space policy in India. You do anything in space and it is always a dual use. I launch a rocket and it goes to orbit. If I tweak the software, it can land in Pakistan. So, it falls into the dual use category and the government will invoke the National Security class. This scares the investors to invest in space. We had to work with them and literally force the Department of Space to come up with space policy. ISRO had already nurtured industries to do something for space, but that was built to print. We had not reached the maturity of sending our own product to space. That is the shift which we wanted to do.

Now you see the change happening. Our PM proudly announced that in the 450 Bn$ space market, India is a leader because ISRO is very well respected and they are very good. Shouldn’t India have its own piece of the cake?
The US is a very strange country. I don’t know from a software perspective but for space, it is very different. If we want to do anything new, they will readily invite us but we can’t get anything from US because there is ITAR, which doesn’t allow you to import certain things. There is something called The Missile Technology Control Regime. India was not a signatory to that elite body. We had to push and there were other industries also pushing for it. In 2017, India became a signatory to MTCR, through which, you can sell now dual use technologies to US and other friendly countries. This opened up a very big door for people looking at innovation that can happen at a lesser capital. You see a lot of firms like Boeing and others coming in, looking in India to see what solutions in space they can offer. The next challenge was opening up to investors and asking them to add aerospace into one of their deep tech portfolios. For four years, we had turbulent times. We started fundraising in 2015 and completed it in 2019. During this time, we had to tackle the problem differently and make the customers pay. So we made ISRO and DRDO to buy from us. That sustained the team. Now we wanted to expand and we needed venture capital to go out of India. We are the first startup to get a space focused VC investment in the country. Now we have 50 plus people.

You pivoted a couple of years back and had an association with Skyroot. Can you talk about that?

Rohan: Skyroot and Chennai-based Agnikul are launch vehicle companies. Just like Elon Musk, they also want to build rockets. But rockets can put satellite into only one orbit. Space is very big. Point A to point B is a couple of thousands of kilometres. Many of the satellites today, thanks to electronics and miniaturization, are getting smaller and smaller but the rocket is still big. So for you to fly as a secondary passenger, you need to wait for three or four years.

What we said is that we have a good efficient engine. We are building something called space taxi, just like we have Uber. If ten people want to go to 10 different orbits, now we book 10 different dedicated rockets to go to that space. We can take all ten on top of our space taxi, drop them at their location and at the same time after dropping them, we can also do space sweeping. Space debris is a major issue these days. We also go and clean the space and de-orbit. Skyroot has this launch vehicle solution. It is a good collaboration and we are building an ecosystem.

What do you look for in a deep tech if you want to invest?

Lakshminarayanan: We look for people who have crazy ideas. They ask: Why is it that such a thing is not happening? Just like Urbaser Sumeet, why can’t I start a company to clear up the debris in the space? That is the kind of thinking we are looking at it. We look at them even from the concept stage.
One of the companies that we deal with is working on developing an alternative to lithium-ion battery which has reached its maturity point. They are experimenting with molten sodium. Another startup says they can produce 99.99% pure carbon anode material from straw. Straw is burnt in Punjab. After the harvest season, they can take that straw and make pure carbon which is required in so many other industries. In addition, it can be used to make batteries that have a much longer life.

We are looking at such ventures. What we look in the deep science area is essentially something that is going to create a great impact on billions of people. But it is not going to happen tomorrow or day after. It will happen much further down.

Chinnu Senthilkumar: We invest typically in ticket sizes between 2 million and 7 million. Ideally we prefer companies having some product, with or without some customer fit. The product can be in the seed stage or lab stage of development or a mix of both. What do we look for in the founders?
• They must have interdisciplinary skills and financial knowledge. Good founders understand the technical, financial and commercial aspects. They must have some basic understanding of whether it makes commercial sense to launch a product.

• In a multi-fold founder team, they should complement each other in knowledge and skills.
• We also look for a mix of youth and experience, say 15 years in the industry.
• Do they have some unusual characteristics in them?
• Do they have perseverance?
• Have they gone out of the way to do something in their life?
• When I hired scientists some 10 to 15 years ago, I used to hire guys who had come from polytechnic backgrounds. There are many bright kids who might not have got engineering, due to family reasons. Then they study engineering and become successful. How do they work on obstacles in life?
• What kind of competitive game do they play?

Typically for a deep tech, even to get the prototype or the minimum viable product, it is going to take a lot of money and time. Do you release money based on some milestones or is there some other criteria which you adopt?

Chinnu Senthilkumar: It depends on the founding team and their convincing of how they have thought through all the steps. Even if there is a failure, founders must know how to tackle it and to work around it. They are dynamic and have a very good understanding of the ecosystem. We bet a lot on the founders. They have to be innovative on many angles.

Lakshminarayanan: The founders, their quality, passion and desire to succeed are extremely important. Look at Metaverse. In the short span of time after it has been announced, a number of new companies have come in that space, exploiting AI and Blockchain. If you want to build some applications, there is some company that is providing the platform for that. If you want to play games in the metaverse, there are plenty of games that are available there. Once the fundamental technology is understood, applications come out really fast.