Deep Tech and Dual-Use: Pioneering the Next Wave of Transformational Innovation
In laboratories and research centers across the globe, a quiet revolution is underway. It’s not about the next app or a minor software update; it’s about foundational breakthroughs poised to redefine our world. This is the domain of deep tech, an approach to innovation rooted in significant scientific discovery and advanced engineering, aimed squarely at solving the world’s most fundamental problems.[1][2]
These are not incremental improvements but “first-of-a-kind” innovations based on “breakthrough science and engineering,”[3] often tackling challenges once deemed unsolvable.[4] Deep tech was “impossible yesterday, barely feasible today, and may soon become so ubiquitous and influential that we will struggle to remember life without them.”[5] Its novelty gives it the power to create entirely new markets or dismantle existing ones, making it a focal point for visionary investors and a catalyst for progress.
The Anatomy of a Deep Tech Venture
What truly sets a deep tech venture apart? It's a unique DNA composed of several key traits:
- A Problem-First Mission: Deep tech is driven by purpose. A staggering 97% of these startups contribute to at least one of the UN’s Sustainable Development Goals (SDGs), a testament to their commitment to solving significant global challenges.[6] This is not a coincidence; the sheer difficulty of the problems being addressed—from climate modeling to drug discovery—necessitates the kind of "deep" science and engineering that defines the field.
- Convergence of Disciplines: Innovation rarely happens in a silo. 96% of deep tech startups leverage at least two technologies, with two-thirds using multiple advanced technologies. This interdisciplinary approach is essential for cracking complex problems.
- From Bits to Atoms: Moving beyond pure software, 83% of deep tech ventures are focused on creating physical products, fundamentally shifting “the innovation equation from bits to bits and atoms.”
- Defensible Technology: With approximately 70% of companies holding patents, deep tech is characterized by strong, hard-to-reproduce intellectual property, creating formidable competitive barriers.[7]
- Grounded in an Ecosystem: These ventures are not born in a vacuum. They typically emerge from and maintain close ties with universities and research institutions, a symbiotic relationship that provides a continuous wellspring of talent, infrastructure, and "cutting-edge technological inventions."[8]
- A Marathon, Not a Sprint: The journey from lab to market is long, often taking five to eight years or more, and requires significant, patient capital to fuel intensive R&D, prototyping, and scaling.[9]
These characteristics define the unique investment profile of deep tech—high risk, high potential, requiring the specialized understanding and long-term commitment that defines a new class of investors.
In today’s increasingly fraught geopolitical environment, the most transformative technologies rarely fit neatly into "civilian" or "defense" boxes. This is the realm of dual-use technologies—innovations with applications in both commercial and defense sectors.[10]
Historically, GPS and the internet are prime examples. Today, artificial intelligence, biotechnology, robotics, and advanced materials are inherently dual-use, becoming critical for national security, technological sovereignty, and supply chain resilience. This strategic reality is reshaping policy, with initiatives like NATO’s Defence Innovation Accelerator (DIANA) and shifts at the European Commission actively seeking to fund and foster dual-use deep tech.
For startups, a dual-use approach can be a powerful strategic advantage. The defense sector often acts as a demanding first customer, de-risking technology and providing a source of non-dilutive funding that helps ventures cross the infamous "valley of death" between research and commercial viability.[11] While this path presents unique ethical and regulatory complexities—the "dual-use dilemma"—it also offers an opportunity for leadership in responsible innovation.
Funds like Luminova Ventures operate at this critical intersection, fostering foundational technologies that solve complex civilian challenges while simultaneously enhancing security and driving broad economic progress.
The Investment Landscape: Fueling the Future
The deep tech market is not just growing; it's exploding. Private investment, M&A, and IPOs soared from $15 billion in 2016 to over $60 billion in 2020. [12] Looking ahead, the global market is projected to reach an astonishing $714.6 billion by 2031, expanding at a compound annual growth rate of 48.2%. [13]
Even during recent venture capital downturns, deep tech has demonstrated remarkable resilience. In 2024, while mainstream tech investment in Europe plummeted by 60%, deep tech saw a more modest 28% drop. [14] This suggests a robust, less momentum-driven thesis, where value is tied to substantive breakthroughs rather than fleeting trends.
“We see deep tech as a prime investment opportunity. Core technologies are at an inflection point, and Europe’s potential remains untapped. But this isn’t a spray-and-pray game—we work closely with top labs and use our own Semantic Visions platform to identify transformative tech before the crowd.” — Pavel Heczko, Partner, Luminova Ventures
Investment is concentrating in several hotbeds of innovation:
- Artificial Intelligence (AI/ML): Saw $3.0 billion invested in Europe in 2024, a 113% year-over-year increase. [15]
- Biotechnology & Healthcare: Revolutionizing drug discovery and diagnostics, with European investment in computational biology and chemistry growing by 59% in 2024. [16]
- Novel Energy & Climate Tech: Investment in Europe jumped by 75% year-over-year, reflecting the global push for sustainability. [17]
- Quantum Computing: A nascent but explosive field, with market projections ranging from $7 billion to $65 billion by 2030. [18]
- Space Tech: European investment grew a solid 20% in 2024, signaling a renewed focus on space as critical infrastructure. [19]
This momentum, blending private venture capital with strategic public funding, is creating a fertile ground for the next generation of world-changing companies.
Why Deep Tech Matters: A Trifecta of Impact
The importance of deep tech extends far beyond financial returns, creating a threefold impact on society.
1. Solving Grand Challenges:
Deep tech ventures are on the front lines of humanity's greatest challenges. They are developing solutions for climate change through next-generation batteries and carbon capture; advancing medicine with new vaccines and personalized cancer treatments; and tackling resource scarcity with innovations in agritech and alternative proteins.
2. Fueling Economic Transformation:
These innovations are powerful economic engines, creating entirely new industries and enhancing productivity across existing ones. Generative AI alone could add up to $4.4 trillion in value to the global economy annually. [20] By bridging disparate industries, deep tech acts as a catalyst for widespread economic growth.
3. Bolstering Security and Sovereignty:
In a complex world, dual-use deep tech is fundamental to national defense, cyber resilience, and supply chain autonomy. As Europe and its allies focus on "technological sovereignty," innovations in AI, quantum, and advanced materials become essential for maintaining a strategic edge.
Navigating the Future: From Lab to Market
The journey from a lab discovery to market successful product is a perilous one. The time and capital needed for fundamental research, applied research and finding product market fit is longer. It is compensated by higher returns though.
Successfully navigating this path requires more than just capital. It depends on a network of:
- World-class research institutions as the wellspring of innovation.
- Effective incubators and accelerators, like NATO's DIANA, to provide mentorship and resources.
- A continuum of funding, from early-stage grants to the patient, specialized capital offered by VCs.
- Strategic corporate partners to act as first adopters and provide market validation.
- A deep pool of scientific and commercial talent.
Specialized venture funds like Luminova Ventures play the crucial role of "ecosystem orchestrator," actively connecting founders with the talent, partners, and resources needed to succeed.
Looking ahead, the next wave of innovation is already forming on the horizon. Watch for breakthroughs in agentic AI, the first commercial quantum applications, advanced neurotechnology, and synthetic biology to begin reshaping our world once again.
Sources:
European Commission, “Deep Tech: Europe’s new growth engine”
https://single-market-economy.ec.europa.eu/news/deep-tech-europes-new-growth-engine-2023-07-11_en
BCG, “Deep Tech: The Great Wave of Innovation”
https://www.bcg.com/publications/2021/deep-tech-the-great-wave-of-innovation
European Innovation Council, “What is Deep Tech?”
https://eic.ec.europa.eu/news/deep-tech-europes-new-growth-engine-2023-07-11_en
Atomico, “The State of European Tech 2022”
https://2022.stateofeuropeantech.com/
R. D. Atkinson, “How Deep Tech Will Shape the Future,” ITIF
https://itif.org/publications/2023/06/19/how-deep-tech-will-shape-the-future/
Hello Tomorrow & BCG, “The Deep Tech Investment Report”
https://hello-tomorrow.org/whitepaper/2019-deep-tech-investment-report/
OECD, “The Deep Tech Dilemma: Patents, Policy, and Progress”
https://www.oecd.org/sti/deep-tech-dilemma.pdf
Nature, “The Power of Research Ecosystems in Deep Tech”
https://www.nature.com/articles/d41586-021-02444-9
BCG/Hello Tomorrow, “The Deep Tech Investment Paradox”
https://www.bcg.com/publications/2021/deep-tech-investment-paradox
NATO DIANA, “Defence Innovation Accelerator for the North Atlantic”
https://www.diana.nato.int/
ITIF, “Bridging the Valley of Death: The Role of Dual-Use Tech”
https://itif.org/publications/2019/06/17/bridging-valley-death-role-dual-use-technology/
BCG, “The Deep Tech Investment Report”
https://www.bcg.com/publications/2021/deep-tech-the-great-wave-of-innovation
IndustryARC, “Deep Tech Market - Forecast (2024-2031)”
https://www.industryarc.com/Research/Deep-Tech-Market-Research-511431
Dealroom, “European Deep Tech Report 2025”
https://dealroom.co/uploaded/2025/05/Dealroom-European-Deep-Tech-Report-2025.pdf
or
https://dealroom.co/blog/european-deep-tech-2025
PitchBook, “European AI VC Investment” (2024)
https://pitchbook.com/news/reports/q2-2024-european-venture-report
The Business Research Company, “Computational Biology Global Market Report”
https://www.thebusinessresearchcompany.com/report/computational-biology-global-market-report
Sifted, “Europe’s climate tech investment record”
https://sifted.eu/articles/climate-tech-investment-europe-h1-2024
ResearchAndMarkets, “Quantum Computing Market Forecast”
https://www.researchandmarkets.com/reports/5413902/quantum-computing-market-global-industry
Dealroom, “Space Tech Investment Report”
https://dealroom.co/blog/space-tech-europe-investment-2024
McKinsey, “The economic potential of generative AI: The next productivity frontier”
https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier
