Quantum computing and biotech star in a new report from Boston Consulting Group today that takes an in-depth look at the emerging “deep tech” ecosystem, new and emerging technologies quickly gaining attention from investors and consumers alike.

“The Dawn of the Deep Tech Ecosystem” report spans four years, 10 countries, a survey of more than 2,000 startups and seven areas of deep tech investment: advanced materials, artificial intelligence, biotech, blockchain, drones and robotics, photonics and electronics, and quantum computing.

The report found that from 2015 to 2018, quantum computing and biotech outpaced AI and blockchain in private investment funding, with 2018 the highest year of capital investment in deep-tech startups. Investment in the sector increased more than 20 percent per year from 2015 through 2018, when it reached almost $18 billion.

On a country-by-country basis, the big national players dominate the space but by no means own the playing field.

Although 53 percent of all deep tech companies in the study are based in the U.S., the report finds that both the number of U.S. firms and their share of global deep tech have been declining in recent years.

Part of that shift is credited to government spending. While the Chinese government increased research and development funding by 62 percent over the period, government funding in the U.S. declined 6 percent.

“Three attributes characterize deep tech in a business context,” the report explains. “These technologies can have a big impact, take a long time to reach market-ready maturity and require a significant amount of capital.”

Moreover, the report says, “Deep technologies are novel and are significant advances over technologies currently in use.” As a result, they require “concerted R&D” to develop practical business or consumer applications.

“Many of these technologies address big societal and environmental challenges and will likely shape the way we solve some of the most pressing global problems,” the report adds. “These technologies have the power to create their own markets or disrupt existing industries. The underlying IP is either hard to reproduce or well protected, so they often have a valuable competitive advantage or barrier to entry.”

Image: Boston Consulting Group