Deep Tech versus Traditional Start-ups: A Comparative Study of Funding Patterns

Abstract

By investigating the differences in funding dynamics between deep tech and traditional tech start- ups through a quantitative approach, this thesis expands on the results of previous qualitative work by providing empirical evidence and quantitative insights. Further, it sheds light on the effects of geographic and lifecycle factors on the funding relationships. To accomplish this, the study analyses a cross-section data set consisting of 13,208 traditional and 325 deep tech ventures founded in North America and Europe since 2010. It examines how funding, investor composition and valuations differ across these two groups and how these differences are influenced by geographic location and stages of their lifecycle. It provides empirical evidence that deep tech companies raise more capital and rely on different investors to cater to their specific needs at different stages in their development and underscores a gap between the European and American ecosystems. By highlighting the differences in funding dynamics between deep tech and traditional start-ups, this thesis con- tributes to a well-founded, robust understanding of the space and offers new insights that can help tailor a supportive ecosystem for innovative deep tech ventures.