What are deep tech-specific valuation considerations?
Short Answer
Deep tech (AI, biotech, hardware, quantum) valuations depend heavily on proof-of-concept validation, IP strength, patent portfolio defensibility, and timeline to commercialisation.
Full Explanation
Deep tech companies (long R&D cycles, high capital intensity, technical risk) are valued very differently than consumer SaaS. Key factors: (1) IP Strength (patent portfolio breadth, defensibility, freedom-to-operate), (2) Proof-of-Concept (working prototype, validated results), (3) Team Credentials (PhDs, prior tech leadership), (4) Path to Revenue (clear customer adoption timeline), (5) Capital Intensity (total capital expected to reach profitability), (6) Competitive Landscape (who else is building similar technology?). Deep tech raises capital in tranches tied to milestones: Seed (proof-of-concept), Series A (prototype validation), Series B (commercialisation pathway), Series C+ (growth to profitability). A biotech company might raise £5M at seed to develop a molecule, then £20M Series A to conduct early trials, then £100M+ Series B for clinical trials. Each round values the company based on de-risked milestones. Deep tech valuations are often lower on revenue multiples but justified by IP value and long-term opportunity. For deep tech founders, articulating the science, defending IP, and demonstrating customer interest are more important than unit economics.
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