These industries lead the way
Karthee Madasamy Contributor
Karthee Madasamy is the managing partner at MFV Partners, a deep tech-focused venture firm.
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Since reaching lofty, all-time highs in 2021, startup exits have hit all-time lows over the last 12 months as interest rates skyrocketed, access to cheap money dwindled, and opportunities to cash out dried up. The first half of 2023 saw the lowest combined exit value for U.S. companies and venture capital investors in about 15 years, according to PitchBook data.
However, in Q3, we saw some light at the end of the tunnel, with PE/VC exits in August hitting the highest they’ve been in over 22 months. Perhaps surprisingly, deep tech companies, which I’d define as novel technologies or those using engineering-led innovations, have contributed to that initial, slow rebound for those not closely following the area. Looking at the Crunchbase big board of $1 billion startup exits for 2023, a quarter of those 16 unicorn exits are deep tech companies. Given the sheer number of deep tech unicorns minted over the last few years, it’s not a surprise for our team. In 2021, we compiled a list of deep tech companies that had eclipsed the $1 billion valuation and found that 120 deep tech unicorns had already created nearly half a trillion dollars of value.
But for those not closely following the deep tech space day to day, it’s possible to still believe that you can’t build deep tech unicorns and that there are only a handful of deep tech exit opportunities each year. However, the truth is that deep tech innovations are no longer science fiction or research experiments. Many earth-changing deep tech solutions are being commercialized, and successful exits continue to increase in number and size. In that sense, deep tech exits are no longer science fiction either. To understand this better, our team recently analyzed global deep tech exits over the last decade for what we believe is the first time in the industry (2013–2022), and here is what we uncovered.