An unrelenting pursuit of deep tech

AS we see market needs diverge from supply chain capability, we can wonder what natural forces create the longer-term underlying growth that is less influenced by capital distortions and misallocation of capital. The term ‘deep tech’ has emerged to describe these longer-term, more robust advancements of mankind that can power economies for decades. Examples of deep tech are solid-state transistors, lasers, and wireless communications. True deep tech is the result of decades of science and technology progress that arrives at previously hidden high-growth markets and flourishes at the right time.

A “previously hidden market” refers to the inability to foresee the exact market application 10 years or more into the future. Certainly, no one can predict what lies ahead, and when it comes to deep tech, throwing darts into the far future would be a risky investment. Over the 10 years or more of research, we must receive feedback from the research results while we steer in the direction of the immersive environment that demonstrates potential for commercialisation. Our current research and development (R&D) institutions are set up largely to explore science in the context of incremental refinement. Adding phrases to funding researchers in these institutions such as “use-inspired” does not help, as the R&D processes are still the same. How can we get back to creating lasting innovations from deep tech?

Singapore’s evolution into a deep tech powerhouse

To prepare for the future challenges facing us, over the last quarter century, I have been exploring the evolution of long-term deep tech investment in Asia, particularly in Singapore. This exploration has been bottom-up, beginning with traditional R&D funding as a professor/research scientist in the Massachusetts Institute of Technology’s (MIT) original collaboration with Singapore, the Singapore-MIT Alliance. Since 2019, I have been leading SMART, MIT’s Research Enterprise in Singapore, where we nurture research, innovation, and enterprise for impactful deep tech in the Singapore ecosystem. From my SMART and other experience, few places outside the United States can have fundamental processes work over decades to create deep tech. Singapore is one of the emerging hot spots for deep tech, with KPMG ranking it top in the world among leading technology innovation hubs in 2021, and with continued investment and a forward-thinking mindset, the country could become a strategic model for other countries to implement.

Over the last 20 years, ultra-low-cost capital attempted to shift much of this 10-year-plus timeline to startups. However, a return to properly priced capital will in turn demand a return to government funding for most of the R&D timeline, and therefore these longer-term innovation processes must cross the government/market boundary.

Investment that builds a deep tech ecosystem

To that end, the Singapore government has for many years placed a strong focus on science and technology, introducing attractive incentives to encourage interest from foreign institutions and companies as well as committing to a world-class education system to maintain a pipeline of talent from local academic institutions. Singapore is taking an entire-ecosystem approach, which is rather unusual among nation-states – but not for the Republic, which has a long record of investing heavily in decade-long “master plans” and other long-term development initiatives.

Investment in deep tech startups in Singapore more than doubled from S$324 million in the first 9 months of 2020 to S$861 million in the first 9 months of 2021 – impressive numbers for a country slightly more than 3.5 times the size of Washington, DC. In October 2021, Singapore’s Temasek International announced that it would invest S$1 billion in deep tech every year, including in the areas of advanced manufacturing, disruptive materials, net-zero tech, life sciences and food tech.

I have been involved with the venture capital industry in Singapore and witnessed its evolution to become a strong backer of deep tech, with more than S$150 million worth of investments led by Enterprise Singapore’s Seeds Capital in the first half of 2021 alone earmarked for 3 deep tech sectors – advanced manufacturing and engineering, health and biomedical sciences, as well as urban solutions and sustainability.

Deep tech requires long gestational periods (more than 10 years) and significant investment in terms of both time and funding from researchers and investors. The entire process, from research discovery to productisation, can take many years, and Temasek’s commitment to deep tech is showing Singapore’s readiness to power ambitious R&D initiatives that require long gestation and patient capital.

Deep tech must be guided through a process where market applications and implementation are interactive with collaborative teams performing long-term research, innovation, and enterprise processes. Thus, it is advantageous to foster environments where such processes can involve global participation and investment upon the launch of R&D. For example, Singapore fosters global scientific collaboration by situating many international research institutions – including SMART – within an international research campus called the Campus for Research Excellence and Technological Enterprise (CREATE), where co-located long-term research efforts are also being pursued by Switzerland, Germany, Israel, the United Kingdom, France, and others.

Furthermore, the Economic Development Board in Singapore can connect fruits of deep tech progress to multinational corporations involved in global innovation. Today, Singapore is the second-most globally connected country, and its strategic location of being within a 7-hour radius of any Asia-Pacific country makes Singapore an ideal hub for these processes. Singapore is also a nucleus for high-tech manufacturing and exports, with the country ranking as the fourth-largest exporter of high-tech goods globally.

Over the last dozen years, SMART has been impactful in the Singapore ecosystem. It has launched 55 new companies, and some have been acquired, with a total merger-and-acquisition value of some US$1.3 billion so far. SMART has patented over 500 inventions and hopes to continue this trajectory. Its processes have evolved, and we continually improve and iterate our fundamental innovation processes with a focus on deep tech.

How deep tech can shape the future

The Covid-19 pandemic has put into sharp relief the scale of the threats and challenges facing humanity today. On the other hand, however, the pandemic also spurred us to dig deep, innovate, and leverage technology to find solutions to limit viral spread, treat infected patients, optimise global logistics, and more – all of which saved countless lives and equipped us with the tools and lessons necessary to future-proof ourselves against the next big unknown.

Due to its scope, depth, and often multidisciplinary and intersectional nature, deep tech can build entire new industries and fields, catalysing economic growth and accelerating skilled, high-value job creation. Moreover, deep tech, when pursued with the innovation process, is inherently problem-orientated, and can be steered towards significant challenges in industry and society, with pandemic-induced innovations and solutions being a case in point.

Changing the mindset to refocus on deep tech processes that can translate into regional and global productivity will be a challenge for all of us, given the global macroeconomic distortions affecting deep tech processes during the last 2 decades. Singapore has certainly stepped up and is doing everything possible to increase its long-term continuous stream of deep tech research, innovation, and enterprises. Let’s hope the world is successful in similar ecosystem improvements, and we can bridge to a future of higher innovation efficiency, productivity growth, and living standards for all.

The writer is chief executive officer and director of the Singapore-MIT Alliance for Research and Technology (SMART).