Demystifying deep tech: Capital, capability and conditions for growth
By Catherine Wright, Director, Consumer Internet, Climate & Frontier Tech, Corporate Banking at HSBC Innovation Banking
Key Insights
Deep tech is defined by hardware-driven innovation rooted in science or engineering breakthroughs (e.g. robotics, quantum, semiconductors).
Maturing technologies and convergence—quantum meets robotics meets XR—are creating powerful new verticals.
Investor interest is expanding: deep tech now represents nearly a third of Europe’s venture capital in 2025. £8.8B was raised in the UK alone during 2023.
Often conflated with software-first innovation, deep tech is grounded in machinery and scientific advances—everything from space systems to mixed-reality capsules. Catherine Wright begins with a striking quote from Bill Gates: “Software is more important than hardware,” only to flip it—deep tech is pushing forward new realities.
In 2025, many hardware-focused verticals are converging: robotics, quantum, XR and semiconductors are blending into hybrid ecosystems, accelerating faster than before. Investors are taking note: deep tech makes up roughly one-third of VC deployment in Europe this year, with UK alone raising £8.8 billion in 2023 across 1,346 deals.
This shift is prompting broader access to capital: institutional funds are increasingly entering what was once a niche and capital-intensive arena. As development costs decline and cross-sector convergence takes hold, barriers to entry are shrinking—and opportunity is amplifying.