This report is the third of a series of Hello Tomorrow and BCG reports on deep tech. The objective is to provide an overview of the current investment dynamics in deep tech, while highlighting which opportunities could be unlocked and how. The report relies on multiple inputs and sources: press, market reports on venture capital, private equity and investment in deep tech, interviews of deep tech founders, deep tech investors and experts, a Hello Tomorrow and BCG survey to deep tech ventures and investors. Despite investment growing to more than $60 billion in 2020 and its massive disruption potential as the Fourth Wave of Innovation, deep tech is hindered by the current investment model. The deep tech investor model is emerging along three design principles: Adopt a new approach: growing in-house knowledge and building a large ecosystem to support ventures, acquiring a problem-market orientation mindset favoring risk mitigation over risk minimization, and rethinking the portfolio strategy thus reshaping the distribution of returns; Embrace new investment models with adapted financing tools, larger funds with possibly longer timelines, and new investment structures to support it; Emphasizes the profound SDG and societal impact deep tech ventures aspire to have at a time when SDG and climate concerns are becoming ever more central and become mission driven for the coming existential challenges ahead for humankind. These principles shape investor archetypes in an ecosystem that is shifting from few players and assumptions trapped in a static equilibrium, to players engaged in the evolution of both the boundaries and rules of the game in a dynamically adaptive equilibrium. Deep tech investing presents a unique opportunity for investors as well as a moral imperative: 1) Deep tech addresses massive untapped markets; 2) The deep tech “tax” is lower than ever; 3) Now is the time to seize a first-investor advantage, to avoid missing the exponential wave; 4) Deep tech investments could exceed $200 billion by 2025 if this new investor model (and ecosystem) is mobilized into action; 5) Investors have a critical part to play in supporting in parallel all the breakthrough solutions that alone can meet the world and society’s most intractable problems.

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