What is 'deep tech' and what is unique about it from an investment perspective? SOSV shares the lessons learned from investing in over 800 startups, many in robotics, IoT, medtech, synthetic biology and more.

1. Investingin
DEEPTECH
May 21, 2019 — London

2. Benjamin Joffe
Partner
HAX (SOSV)
Welcome!

3. Investingin
DEEPTECH
March 21— San Francisco
May 21 — London
May 29 — Paris
June 6 — NYC
June 7 — Boston

4. 2018:
STARTUP
EXITS
7 EVENTS
SF, NYC, London, Paris
50 EXPERTS
CEOs, Corporates, VCs, Bankers, Lawyers, Stock Exchanges, etc.
(incl. John Chambers, Cisco Chairman, 180 M&As)

5. AboutSOSV

6. SOSV Fund
$625M AUM
800+ startups
Most Active
Lead Investors
Globally In 2018
#1 in IoT #4 in Health Tech

7. SOSV Model
Advanced
prototype
Lab
prototype
Idea Product Growth
1 2 3 4 5
Pre-pre-seed Pre-seed Seed Series A Series B, etc.

8. Ireland
Back office
London
Biotech
Paris
Liaison
Taipei
Mobile
Shanghai
Cross-border internet
Shenzhen
Hardware
SF
Hardware
Biotech
NYC
Food
Blockchain
Hands-on Capital

9. Hands-on Capital
Labs
Experts
01/
02/
Unique ecosystems03/
Electronics: Shenzhen, SFBiotech: SF, London
150STARTUPS
PER YEAR

10. 10
JUMP BIKES
Uber, $200M + stock
HARMONIX
$175M + earn-out
Makeblock (val. $367M)
Memphis Meats (Gates…)
BitMEX (#1 Crypto exch)
Formlabs GetAround
Some
SOSV
Startups

11. Digital Therapy
Flow Neuroscience
Brain Stimulation
Depression Treatment
Digital Diagnostic
Criam Tech
Instant Blood Type Diagnostic
Digital Tool
OpenTrons
Pipetting Robot For Biotech
Industrial Automation
Youibot
Autonomous Robots For Inspection
Consumer Tech
Nura
Personalized Audio
(Stevie
Wonder)
Sweden Portugal NYC
China Australia

12. Hands-on Capital
• Global early stage fund
• $625M AUM
• Hands-on Deep Tech (hardware + life sciences)
• >800 Startups
• +150 / year
• Pre-seed + labs + follow-on

13. WhatIs
DeepTech

14. Definition
Deep Tech
Hard Tech
Emerging Tech
Frontier Tech
Future Tech
…
I know one
when I see one!

15. Definition
Not simple website or app
Science & Engineering
Often tangible component (electronics, molecules…)
01/
02/
03/

16. Deep Tech
Tech risk02/
Longer time03/
More capital04/
Tech mix (CS + Other)01/

17. Why Bother?
Connect physical & digital world
Real needs in all industries
Under-funded = opportunities
01/
02/
03/

18. Hypothesis
Car industry is the first in line (EV, A.I.).
Others will follow.
Tech Disruptor needed 20 years, now 10y
Soon 5y or less (Luckin Coffee?)
Waves of innovation
(e.g. fitbit => specialized tracking => digital therapy)
01/
02/
03/

19. John Deere
buys
Blue River
$305M

20. J&J (Neutrogena)
buys
Illumask

21. Risks
(Tech) x (Market) x (Execution)

22. Walls & Moats
Patents
Regulations
Distribution
Network Effects
Stickiness
Technology
Team
MOATS
WALLS

24. Moat or Grave?

25. ~$1B of Failures
Jibo
$72.7M
Rethink Robotics
$150M
Airware
$118M
Lytro
$216M
Anki
$182M
Meta
$73M

26. Unicorns & IPOs
Company Type Sector Valuation Funding Founded Country
SpaceX B2B Space $30.5B (IPO) $2.4B 2002 US
DJI Consumer Drones $15B (*) $105M 2006 China
Bitmain B2B Crypto mine $15B $765M 2013 China
GM Cruise* B2B
AV tech $15B $3.4B 2013 US
Magic Leap B2B AR $6.3B $2.3B 2011 US
Auris Health B2B Surgery robot $3.4B (acq.) $733 2013 US
Zoox B2B AV tech $3.2B $790M 2014 US
View B2B Smart glass n.a. $1.8B 2006 US
Nuro HAAS Delivery robot $2.7B $1B 2016 US
Zume HAAS Pizza robot $2B $423M 2015 US
Carbon B2B 3d printing $1.7B $422M 2013 US
Ninebot Consumer e-scooters $1.52B $240M 2012 China
Desktop Metal B2B 3d printing $1.5B $437M 2015 US
Proteus B2B Medtech $1.5B $487M 2001 US
Butterfly Network B2B Medical imaging $1.25B $350M 2011 US
FormLabs B2B 3d printing $1B $104M 2011 US
Cruise B2B AV Tech $1B (acq.) $19M 2013 US
Rocket Lab B2B Space $1B $215M 2006 US
Geek+ B2B Warehouse robot $1B $239M 2015 China
TuSimple B2B AV trucks $1B $178M 2015 China/US
OrCam Consumer Medtech $1B $86M 2010 Israel
Cyberdyne B2B Exoskeletons $870M (IPO) n.a. 2004 Japan
SigFox HAAS Telecom $673M* $311M 2009 France
Some are fast and lean.
B2B dominates (AV, robots)
Old trends worked too
(wearables, drones, 3d
printing), but most not DT.
01/
02/
03/

27. Focus: Softbank
02/
01/ The Vision Fund has
become a’kingmaker’.
DT is mostly B2B & HaaS
Company Type Sector Funding* Founded Country
GM Cruise B2B AV tech $2.25B 2013 US
View B2B Smart glass $1.8B 2006 US
Nuro HAAS Delivery AV $1B 2016 US
Zume HAAS Pizza robot $423M 2015 US
Plenty B2B AgTech $226M 2014 US
Light Consumer Cameras $186M 2013 US
Nauto B2B Driving Coach $174M 2015 US
Brain Corp B2B AV Tech $125M 2009 US
TOTAL $6.1B*
* includes co-investors

28. Deep Tech Today
Good news: more and more
startups and investors
Bad news: much fear and
misconceptions, as well as
funding gaps
01/
02/

29. InvestingIn
DeepTech
HardwareToday

30. Deal Flow
Learnings
Some Biases
01/
02/
De-risking & Milestones Specific to Deep Tech03/

31. Pre-seed = pre-trend?
Deal Flow
Hot = too late?
01/
02/
See the future!03/
A.I.
AR ML
Blockchain
VR
Robots
IOT
Edge
Cyber
Security
5G
EV
QC
Voice
Always
-in

32. Signals
Flow of Applicants
Needs of Corporates
01/
02/

33. Sci-Fi
Some Biases
Ugly Duckling
01/
02/
Make-up03/

34. Bias #1: Sci-Fi

35. Electroloom
Liquid Polymer + 20,000V = ???

36. Didn’t find a market…

37. Cell Robotics
A modular robot for the home?

38. Cell Robotics
Modular robotics
Toy? STEM? Tool?
01/
02/
$500 on Kickstarter?03/

39. >30 staff
B2G
01/
02/
Learning speed vs. Lego
(Toy-first vs. STEM-first)
03/
Cell Robotics

40. Today: Boring & Viable
Simbe Robotics, Viabot, Youibot, Plecobot, Avidbots…

41. Futuristic = Risk
Spectacular
and Viable
are often
orthogonal

42. Bias #2: Ugly Duckling

43. Example 1
Prototypes might have already overcome huge tech barriers

44. Simbe Robotics
A nice box & video can make a huge difference

45. Example 2

46. Adapting medical-grade tech for consumers?

47. Nura

48. Second Product
Can you ‘see’ the second product in the first prototype?

49. Example 3
2014: China prototyping & retrofit + Waterloo

50. Avidbots

51. $23.6 million Series B
Avidbots

52. Avidbots
In Singapore airport = robot works amidst people

53. Bias #3: Makeup
A pretty prototype can be still far from a product

54. Nura
Prototype vs Product
May 2016
prototype
Jan 2018
product
Investing shortly before product launch = Opportunity

55. Tech
Risks & Milestones
Market
01/
02/
Founders03/
Timing04/

56. Do you need a PhD in everything?
Tech
Do patents matter?
01/
02/
How to avoid the next Theranos?03/

57. Due Diligence
Prototype check: delivers core signal processing?
Assess manufacturability
Price vs. BOM + Operation costs
02/
03/
05/
Check substance of key patent01/
Validated price point with customers?04/

58. Due Diligence
Clarify the insight or action for end users
Evaluate SW complexity & head start
‘What would google do?’ (or Medtronic)
07/
08/
10/
Determine next milestone for funding06/
Is the team using the right tech?09/
Skills needed (esp. robotics)11/

59. • Pre-product Validation
• False positives
• Features / price / demand
Market Risk

60. Idea + Team
+ +

61. i-Corps (US ~100 unis + some in Canada)
Pre-Pre-Seed
Entrepreneur First
(UK, FRA, GER, HK, SIN, Bangalore)
01/
02/
DeepTech Founders (France / EU)03/

62. • The enemy within
• Highest risk pre-product
• Some can be avoided
Founders Risk(s)

63. Give up
earlySevere
Asperger
Can’t
execute
‘Artist’
Silicon Valley
Burn Rate
Caught Up In
Startup Theatre
Can’t get
along ‘Maker’
Addiction
DeathHarassment
Founders Risk(s)

64. Give up
earlySevere
Asperger
Can’t
execute
‘Artist’
Silicon Valley
Burn Rate
Caught Up In
Startup Theatre
Can’t get
along ‘Maker’
Addiction
DeathHarassment
Founders Risk(s)

65. EntrepreneurInventor ManagerEngineer
Skills, inclination, CEO/CTO/CSO, Licensing/Advisory?
Founders Risk(s) Scientists as CEOs?

66. Timing Risk
• Why now?
• How deep tech to go?
• 18 months ahead is great
• 3 years ahead is terrible
…Quantum, anyone?

67. Magic Leap
Founded 2011
Raised $2.3B
LaunchAug 2018
Rare case: 7y and $2B before product launch

68. Sana Health
Started as sleep mask to reduce pain…

69. Sana Health
Early 2016
Sleep tech?
01/
02/
Kickstarter? Medical? Funding?03/
Sleep tech was hype, but crowded

70. Sana Today
FDA route + New Positioning:
“Solving Pain Without Pills”
Neurotech / Neuromodulation
is a thing
01/
02/
Opioid epidemic03/
Under Armour
Innovation award
Bayer
Self-Care winner
Mount Sinai
Rehab Competition winner
Medtech Innovator
First prize recipient
Repositioned as ‘painkiller’ = success!

71. Recent News “The latest Apple Watch seemed like the latest
in wearable tech when the conference started
—not so much a few hours later.”

72. Not all in one place
Best Resources?
R&D + initial funding
01/
02/
Prototyping + production03/
Customers & Growth funding04/
Invention
Team
Prototyping
Production
Customers
Funding
Target the next milestone!

73. Labs
Shenzhen (50,000sqft) + SF
Speeding Up Prototyping
Suppliers
#1 electronics supply chain
01/
02/
Experts & Peers
30 in-house (ID, Sourcing, DFM, etc.)
>50 founders (20-30 startups)
>700 alum founders (>200 startups)
03/

75. 1 year => 4 months
Compressing Time
Lower costs (& burn rate)
01/
02/
Lower risk03/

76. 2 4 861 3 7 95
Identify Customers
EVT DVT 1
Manufacturing samples
DVT 2
Marketing samples
PVT Pilot Unit
Production
SOSV (pre-seed) SEED
Product Dev $$$
Month
10
Pilot
12+ 18+
Roll-out
24+
SERIES A
Program
Development
Sales
Fundraising
Shenzhen San Francisco
Develop CRM &
Sales Materials
Pitch Customers
Mass
Production
Establish product
benefits
Fundraising
Timeline: Enterprise / Robotics

77. Funding Gap
Seed is the new A
New rounds: Pre-seed, Pre-pre-seed
Obvious gap after pre-seed in deep tech
01/
02/
03/

78. Due Diligence Do Not
CAC / LTV (no cohort yet!)
Pageviews
Patents? (vs. business model & distribution)
02/
03/
05/
MRR01/
Got FDA? (would not talk about seed…)04/
(it’s not software)

79. Due Diligence Do
Who pays? (medical, etc.)
What’s different?
(from that competitor that just raised)
02/
03/
What’s your TAM?01/

80. Show&Tell

81. #E-Scooters
#Picks&Shovels
#Distributed

85. George Kalligeros
george@pushme.bike

86. #3D Printing
#Distributed
#Zero-waste

87. Open Source
then
Kickstarter:
$636,130

91. Triam Saxena
triambak@kniterate.com

92. #Programmable
#Biotech
#Micro-fluidics

94. Programmable
Microfluidics
Fererico Muffatto
federico@digi.bio

95. #A.I.Coach
#Real-time
#Sports

98. Jamie Grant
jamie@motionmetrics.co

99. Break—15min

100. PlaybooksUnveiled
InvestorsPanel

101. Moderator:
Benjamin Joffe
Partner
HAX (SOSV)
Olivier Huez
Partner
C4 Ventures
Kerry Baldwin
Managing Partner
IQ Capital
Chris Barchak
Venture Partner
Next47
Matthew Sherba
Partner
Breed Reply
Questions: @benjaminjoffe / ben@hax.co

102. Thankyou!
ben@hax.co