Deep tech is described as technology that is based on scientific discovery or meaningful engineering innovation. It is often referred to as problem-solving technology. There is a lot more to it than what we see in the everyday technology industry.
According to Boston Consulting Group, 96 percent of deep tech ventures use at least two technologies, and 66 percent use more than one advanced technology – so it’s not just another cool gadget on the market.
The Stellenbosch-based technology investment group, Alphawave, has been investing in deep tech since the mid-nineties when CEO Frans Meyer, and fellow PhD students in electromagnetic engineering, built a few specialized antenna businesses.
Some remain part of the Alphawave portfolio including EMSS Antennas which developed the world’s most sensitive radio astronomy receiver for the MeerKAT space telescope, part of the Square Kilometer Array (SKA) project.
Another simulation-software business, FEKO, was sold to NASDAQ listed- company, Altair, in 2014.
Alphawave’s engineers continued to innovate in deep tech and have built a portfolio of 16 successful technology businesses.
Today, over half of the companies in the Group are selling abroad, with one firmly established as the market leader in the US. Companies in the portfolio range from established profitable companies, to fast-growing scaling businesses, to incubation and innovation units.
The Group hardly invests in going concerns but instead engages with the best in their field of tech to develop solutions and build new markets or disrupt existing ones.
Funding in deep tech is growing significantly, mainly in China and the US. Boston Consulting Group estimates investments in deep tech have quadrupled from $15 billion in 2016 to more than $60 billion in 20202.
A survey by Hello Tomorrow found that investment in early stage startups alone increased from $36,000 to $2m between 2016-2019. 3 Local investor, Alphawave, is backing five deep tech applications in its innovation units.
Here is a sneak peek into some of the deep tech trends we look forward to seeing South African engineers and developers lead the way in innovation.
1. Web3
When the World Wide Web was created on the internet in the mid-nineties, it had no builtin concept of payment or ownership.
The ‘social web’ era of the past decade allowed regular web users to share content and interact – but with some of the largest companies in the world as custodians of information and payments.
The future of the web allows web users to own content and transact with each other directly using blockchains, cryptocurrencies, smart contracts and Non-Fungible Tokens (NFTs). This is known as ‘Web3’.
There is a lot of criticism about this technology and the jury is still out. Some see Web3 as a major technology shift not to be ignored.
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In 2021, Alphawave invested in Fanfire to discover ways these technologies can have a practical, commercial utility – making this emerging tech more user-friendly and accessible, especially where users have limited crypto knowledge. Gert-Jan van Rooyen heads up this innovation unit, having worked in this space since 2013, he is reinventing the wine, art and sports industry by forming online marketplaces where valuable items can easily be traded using NFTs.
2. Artificial Intelligence
Artificial intelligence (AI) and machine learning are not new kids on the block. The field of ‘AI’ was formally founded in 1956 and has seen periods of hype and investment, along with much disappointment, leading to a slowdown in innovation – also known as the ‘AI winter’.
The adoption of AI is booming again, with McKinsey’s Global Survey showing that most respondents (56 percent) reported that AI has been adopted in at least one business function4.
The combination of computer science and machine learning engineers can be a powerful tool for businesses looking to make an impact on the top line, as well as those looking for cost savings.
ByteFuse, an Alphawave company led by Greg Newman and Etienne Barnard, is doing just that, seeking ways to solve real-world problems with AI. The ByteFuse team is experimenting with several innovative solutions including optimising traffic lights to improve traffic flow and next-gen chatbots.
Predictive Insights is another gem in the Alphawave portfolio leading the way with AI. By combining machine intelligence with economic and behavioural insights, restaurants and retailers can predict demand, improving the accuracy of revenue forecasts up to 18 months ahead, and reducing the cost and environmental impact of waste.
3. Space tech
Space opens up a huge opportunity for the world. According to Bank of America, the space economy is expected to triple from 2020 to $1.4 trillion in 20305.
From Google maps and weather forecasts to advanced deep space tech, applications in this field are enabling our everyday life and expanding our knowledge of the universe.
Hundreds of satellites are launched into orbit each year by researchers, government agencies and private companies to gather data, either observing the earth or looking further into space and then transmitting that data back to earth.
Cubecom, another one of Alphawave’s deep tech ventures, first started exploring innovative space sub-systems for university satellite projects. Today, Sampie Booysen and the Cubecom team design, develop and manufacture communication systems for satellites.
They have experienced a major spike in interest in these systems for space missions, where private sector companies are investing heavily in advanced electronic technology to communicate findings from space.
4. Extended, virtual and augmented reality
The virtual reality (VR) world is another example of technology that has struggled to gather mainstream adoption – at least until the last few years. Web3 and the metaverse are likely to boost growth in these immersive technologies, even more, changing how people connect, especially in the gaming world.
This technology is experiencing an increase in adoption in businesses and academic institutions.
Alphawave’s VR venture, Sozo Labs, is led by Jason Haddock and is changing the way people are trained in the workplace. In construction and heavy industry, this technology can significantly reduce risks and mortality rates, keeping workers safe. Sozo Labs is also exploring ways to enhance education in schools through more immersive experiences.
5. Agri tech
Smart farming is growing significantly. Emerging technologies from AI to drones and the Internet of Things (IoT) are modernising the way farmers operate and significantly improving efficiency and sustainability.
Alphawave’s electronics engineers have been working with farmers to develop advanced IoT solutions with specialised sensors to improve farm management. The portfolio has two agri-tech brands.
FarmRanger is a market leader in South Africa, protecting over three million livestock from theft and predators with a security collar that offers an early warning system when abnormal movement is detected and live GPS tracking during an alarm, managed via maps on the farmer’s smartphone.
The second smart farming brand Farmtrack, tracks and monitors all farm vehicles to ensure rows are not missed when sprayed and improves driver efficiency – also through precision GPS tracking.
Deep tech is constantly evolving, and the outlook is very positive. However, it requires investors to have a very different set of knowledge and skills than typical venture capitalists.
These emerging technologies are not for the fainthearted, it takes years of knowledge in the field to uncover truly useful applications and find practical ways to solve real-world problems that can often change the way we live, work, study, and play
