In the unique landscape of the deeptech sector, numerous companies developing advanced technologies with significant transformative potential face serious challenges in securing funding and often request time from investors to demonstrate results. Despite representing opportunities for disruptive innovation, their complex nature and substantial capital requirements make accessing necessary resources difficult during critical development stages.
Some suggest that investing in deeptech companies is an act of faith in the transformative power of cutting-edge science and technology, requiring patience and a well-crafted strategy to eventually yield significant returns.
Concha García, founder of Next-Gen Leather—a startup producing biodegradable material that can be transformed into non-toxic animal leather with reduced water and energy consumption—explains that "investing in science as a business requires patient capital. Time is needed to develop and shape the idea and project, and eventually scale up."
Mario Garcés, founder of The MindKind—a startup aiming to bridge the gap between generative artificial intelligence (GenAI) and the coveted general AI or AGI — recalls a meeting with a venture capital fund manager who, at the outset of their conversation, stated that his technology is disruptive but that becoming like OpenAI necessitates rapid market entry with substantial investment. Garcés notes that in Spain, venture capital investment often involves managers with access to funds who are not professionals, are overly conservative, and lack technical backgrounds. He asserts that with such profiles, companies like Google or Amazon would not have emerged in Spain, emphasizing that the key issue is speed.
Gonzalo Martínez de Azagra, founding partner of Cardumen Capital, points out that "not all investors are willing to invest. They lack the knowledge to evaluate projects or sufficient contacts to support the company." He adds that entrepreneurs are not mistaken when they speak of the need for time and patience from investors to allow founders to develop their projects. However, he warns that "investors do not determine the duration of funds. For success, the company must deliver results within five to seven years. Investors have a limit."
Martínez de Azagra also believes that venture capital is not well-structured to finance certain businesses requiring prolonged development: "Every 18 to 36 months, startups must raise capital. Cutting-edge technologies often cannot demonstrate that they will become viable businesses."
Some deeptech entrepreneurs assert that the funding problem is less about investors not understanding their projects and more about the reality that there are not enough investors. Martínez de Azagra agrees that there are not as many investors as needed in this sector and opines that "it is sometimes said that investors are not capable, but their business is to identify successful ventures. Investors must have some capacity to evaluate technology, but entrepreneurs must understand that we are not going to delve into details. It is complicated to assess, but one must consider to what extent the investor needs to understand the technology."
The founding partner of Cardumen Capital believes that "entrepreneurs must be experts in their business technology and also understand what venture capital is—how a fund operates and how investors think." He concludes that the peculiarity of the deeptech sector is that "it is a segment that needs more investors with greater patience. The development of these companies differs from those requiring less capital."
For his part, Nacho Sala, partner at Grow Venture—a fund focused on universities and research centers—refers to projects developed by founders from academia who, in certain cases, wish to maintain that status, with their disciples often taking on entrepreneurial and managerial roles.
Sala explains that in such projects, investors value teams that are involved, motivated, and genuinely believe the creation is their own. He adds that "advanced technology can raise doubts. It may be very interesting but could also be a very small niche. From the fund's perspective, obtaining a return would be challenging."
He also believes that "Spain has an extraordinary rate of scientific publications, but there is a huge gap when it comes to turning all that science into businesses."
Almudena Trigo, founder and partner of BeAble Capital—a fund dedicated to deepscience, which, along with digital deepscience (AI, machine learning, or cybersecurity), comprises one of the two major segments of the deeptech sector—explains that "for Europe to be competitive, it must rely on technology, and half of the technologies that define this are deepscience. The deeptech sector is a very large umbrella, and investors in digital deeptech and deepscience cannot be the same." Trigo emphasizes that her company invests in early stages, in the engine of the forthcoming economy: "Deepscience technology enables companies with good margins and qualified employment. It represents a new industry, a new wave of investment, and traditional investors are not suitable here."
According to Trigo, deepscience companies are poised to tackle challenges for which no technologies currently exist. They address needs the market has yet to meet. She believes the market should be eager for the solutions these companies provide and adds that "these are highly disruptive technologies that come to change solutions, and that holds great value. Addressing such market problems is highly valuable."
The MindKind: The Spanish Competitor to Sam Altman Seeking General AI
Mario Garcés and his team at The MindKind are working to bridge the gap between generative artificial intelligence and general AI. While this may not seem significant at first glance, this deeptech company based in Castejón de Sos competes with major AI unicorns and disruptive figures like Sam Altman in the quest for the 'Holy Grail of AI': a machine's ability to reason and behave like a human.
Garcés, who founded his first company at 24 and has experience in consulting and running a rural hotel, has also focused on basic neuroscience research.
He believes that The MindKind's model serves as a "canary in the coal mine," highlighting the funding limitations many companies face in the peculiar deeptech sector, where he asserts that "there are no professional profiles in venture capital." The founder of The MindKind notes that their competitors include DeepMind, OpenAI, and Microsoft, all sharing the same objectives as the Spanish startup, though The MindKind competes with a budget of €300,000.
To achieve artificial general intelligence (AGI), The MindKind follows a different path from its well-known and better-funded competitors. Instead of processing all information through a deep neural network, they segment the input data. Founder Mario Garcés uses the analogy of a beehive: "There, each bee does its job, but it's all one community. The complexity lies in combining all the small pieces and delivering the global result."
