The investor’s radar is no longer tuned to spot SaaS startups with product-market fit and predictable recurring revenue. Today, VC’s are chasing deal flow with deep technological components tied to global challenges and transformative megatrends.
That’s right, deeptech companies have become the new top priority for venture capital. In Europe alone, these startups attracted €18.8 billion in 2023, an all-time record representing over a quarter of total VC activity. By comparison, SaaS investment reached €19.5 billion that same year, a virtual tie with a likely deeptech lead as soon as more recent figures come in.
Source: VDS projection based on Dealroom and Atomico reports.
We recently published an in-depth report on the state of deeptech in Europe, Spain and the Valencia region. Read it here.
Why has DeepTech stolen the spotlight from SaaS?
“Hard to build, hard to copy” is the new mantra among tech VCs.
A product that solves a specific pain point for a homogeneous user base and delivers predictable recurring revenue is no longer enough. Investors are now looking for more: the potential to disrupt entire industries, backed by proprietary technology and scientific innovation.
They’ve also started to shed their traditional concerns about longer time-to-market, especially as AI is expected to accelerate deeptech cycles. Meanwhile, many see a saturation point in the once-prioritized SaaS landscape.
Angela Strange (a16z) already noted in 2023 on the a16z Podcast: “Most of the low-hanging fruit in SaaS has already been picked. The next frontier is infrastructure, embedded intelligence, and vertical reinvention through tech”.
Luciana Lixandru (Sequoia Europe) added: “We’re still investing in SaaS, but we’re much more selective… What excites us today are platform shifts such as AI-native, bio-compute, and deep infrastructure”.
In this new context, deeptech startups (once considered capital-intensive and slow to scale) are gaining favor.
DeepTech is the new ‘blue ocean’ bet
To many investors, SaaS now resembles a fast-food franchise: oversaturated, hard to differentiate, and suffering from margin pressure. Development has become easier and faster and while technical skills and product quality still matter, there’s always a risk that another startup can execute the same idea faster or distribute it better through sales and marketing. That’s the textbook definition of a red ocean.
Capital tends to avoid uncertainty… but in tech VC, it also constantly hunts for uncharted territory and outsized returns. Today, compasses are pointing toward deeptech: not just for its defensibility and differentiation, but because of the scale of the challenges it aims to solve.
Deeptech startups are tackling global, systemic problems such as:
– How to store and distribute clean energy at scale.
– How to detect diseases before symptoms even appear.
– How to develop next-generation materials that are stronger and more sustainable.
– How to optimize agricultural water use in the face of drought and climate stress.
– How to build quantum-secure communications.
– How to automate critical manufacturing processes with robotics that adapt in real time.
This isn’t about building yet another productivity tool, it’s about reimagining entire industries like healthcare, energy, mobility, advanced manufacturing, or defense.
These are the new moonshots that venture capital is ready to back: bold, high-risk bets with the potential for system-wide impact and deep technological moats.
What role will DeepTech play at VDS
DeepTech is more than a trend. It’s one of the core pillars shaping the future of innovation. That’s why this year’s VDS will give it the spotlight it deserves.
From energy transition and quantum breakthroughs to health longevity, cybersecurity, and aerospace innovation, deeptech will be front and center across key verticals such as:
– Smart Cities & Digital Infrastructure
– Next-Gen Consumer Technologies
– Talent & Future of Work
– HealthTech & Longevity
– Future of Energy & GreenTech
– DeepTech & Scientific Innovation
– Aerospace Technologies
– Cybersecurity & Defence
Expect keynotes, panels, and real use cases from the European ecosystem and a unique look at how Valencia is becoming a launchpad for science-driven entrepreneurship.
