October 12, 2021

It’s not deeptech. The new asset class VCs need to look at is science equity

Science equity is different from investing in deeptech. These companies are not digital, but created in the lab.

Almudena Trigo

4 min read

Almudena Trigo, general partner at BeAble Capital

More VCs are investing in companies using cutting-edge digital technologies like AI, blockchain or cybersecurity. These companies are usually categorised as deeptech. 

But deeptech is much more than that. VCs need a new term to describe a sector that’s similar, but not quite the same: science equity. As opposed to deeptech,  science equity is not digital. It is rooted in industrial technologies, also called deep science, and involves fields like nanotechnology, material science, photonics, industrial biotech and quantum computing. 

Another important difference is that science equity investments are focused on the pre-seed, seed and early stages. So earlier than venture capital. 


The lack of a digital element can be off-putting for VCs (no apps, shock!), but these are the companies investors should be backing. Why? Because these are the companies that have the potential to generate the most disruptive innovation and solve some of the enormous challenges facing humanity. 

The state of science equity

These startups will be vital for renewing Europe’s industrial base — IP-intensive industries account for 45% of the EU’s GDP and 93% of exports. Science equity will also be key to reaching the UN's 2030 sustainability goals because of the fundamental technological innovation needed to transition to a post-carbon society. For example, technologies to upcycle waste or capture CO2, or new and more efficient ways of energy generation or storage.

The European Commission understands their importance, and the EU and public investors in various countries are generally good at backing science-based startups. There are a few private investors active in Europe as well, including my fund, BeAble Capital, as well as Innovation Industries, Cottonwood, Venture Factory, Mito and Eureka.

And there are already examples of successful science equity companies with their roots in Europe. Cellink (now BiCo Group), the bioprinting company founded in Sweden whose technology makes it possible to print tissues such as skin, liver and cartilage, is the first science equity unicorn funded by the European Innovation Council. 

Other good examples in Europe are Spain’s Fractus, a pioneer in internal antennas for smartphones. There’s also Skeleton Technologies, the Estonian ultracapacitor startup that’s trying to solve some of the challenges of energy storage in the transportation, grid and renewable industries.

Where the bottlenecks are

To really develop, however, the sector needs to get more limited partners (LPs) backing science equity VCs. Those include private institutional investors like sovereign wealth funds, funds of funds and pension funds with deep pockets and long investment horizons to support the hundreds of millions of dollars and many years required to scale these companies. 

But these investors are often quite conservative and don’t understand the specifics of science equity. Let's not forget that we are talking about deep science and early phases, an interesting combination!

Often when I begin speaking to investors about issues like tech transfer, I lose them. Coining the term “science equity” would be helpful in giving people a shorthand for talking about these types of companies and a framework for understanding them. 

Investors (as in general partners) themselves need to be prepared to give these companies support that's different to traditional or digital VC portfolio companies. They are usually born in a research lab, and investor support and advice on building a business around this “scientific core” is crucial. That can include developing human resources, creating the minimum viable product, working with first customers and getting market traction. 

That means we need specialised science equity funds (and specialised GPs). If science equity funds come in even before generalist VC funds, they can help those generalist funds understand the particularities of the  sector.  


We also need larger science equity funds. Most funds targeting this asset class are about €50m. These are still too small for the kinds of big money that the sector needs to be able to invest. 

A sign of what's possible

A few global companies are already showing the potential of this new category. For example, Cottonwood Technology Fund, which operates out of the US and the Netherlands, had a big win when US robotics company Sarcos listed on Nasdaq via a Spac. This investment was done by Cottonwood’s US team — European science equity investments have not yet developed this far. But it is a sign of what is possible.