Jonathan Wareham: Venture capital and public procurement in deep tech

Jonathan Wareham is a professor of Information Systems at ESADE Business School in Barcelona. His research interests are the intersection of Deep Tech, Scientific Computing, Scientific Policy, and their effects on business. Wareham also works on the ATTRACT project. Here, he talks with the Collider about the role of venture capital, governments and business schools in promoting deep technologies on the market.

What are your lines of research at ESADE?

Our research lies at the point where basic scientific research, scientific computing and business intersect. Our team follows developments in European scientific research infrastructure, such as the European Organisation for Nuclear Research, the European Molecular Biology Laboratory and the European Southern Observatory. We look at the technologies and methods that they develop to solve scientific problems and attempt to understand how these trickle down into the business community, how they can benefit European companies, and how they change the structure of industries.  

What role does deep tech play in solving challenges for humanity?

Deep tech enables technologies that are part of a larger system. Although the transistor was designed to solve a specific problem for telecommunications, scientists also realised that it was highly generalisable and could be used for many different applications. This historical example shows that what was once deep tech has now become an enabling technology with a myriad of applications. Transistors then yielded the silicon chip, which itself led to many other forms of embedded computational technologies. They exist in many solutions associated with sustainable energy, environmental monitoring, water management and even the administration of health policies in the developing world. 

What are the most significant barriers to tech transfer and how can they be overcome?

Venture capital and other organisations involved in selling technology are very impatient. They are short-sighted and focus on very quick financial return. Deep technologies require time –usually more than ten years– to be developed and many of their eventual applications, such as the transistor, are not easy to define. If venture capitalists do not see a sales opportunity within a very short period, then they are neither interested in nor have the patience for the technology. 

Are tech transfer and spin-offs effective ways of innovating in deep tech?

Tech transfer may help to promote a healthy, thriving economy based on deep technologies with higher economic multipliers. However, I think tech transfer is still a hard undertaking and I do not see it as a silver bullet. We should point out again that a significant constraint is that venture capital and other marketing organisations do not feel comfortable with deep technologies, their long periods of implementation and the uncertainty involved.  

What is the role of business schools in the development of deep tech and tech transfer ecosystems?

Business schools have an important role to play. When we teach entrepreneurship, we romanticise and celebrate getting Series A or Series B funding, which is akin to getting rich quickly. Deep technology is not, however, a get-rich-quick type of proposition. It requires a different type of entrepreneur who is patient and hardworking enough to build a company, capable of identifying deep tech’s complex sales channels and dealing with highly sophisticated customers who operate in complex sectors and industries with professional and slow procurement processes. Business schools need to improve how they teach students about this long process and about how to build companies with enduring value in life science, energy, industrial Internet, agriculture, and security, etc. 

How can more private investment be attracted in early-stage deep tech startups?

The best way is to have a customer: the best thing you can do for a startup is buy their products and pay on time. They need revenue to continue funding early-stage development. This is where the public sector plays an important role as it can offer longer-lasting two– or three-year contracts to bring stability to these young startups and some steady revenue. 

So, is public procurement an effective mechanism for deep tech?

Public policy very often focuses on the supply side, on building and on supporting research centres and universities, etc. It is, however, also crucial to promote public procurement to make sure that there are customers buying deep tech products. The defence industry in the United States and the security industry in Israel are good examples. In Europe, meanwhile, the Sustainable Development Goals and other major challenges for society can provide significant impetus in drawing deep technologies from young companies and providing them with a stable source of revenue. 

What are the positions of Barcelona, Catalonia and Spain on public policies for promoting deep tech?

Barcelona and Spain have a lot going for them, particularly in life sciences and biotech, which the government encourages with affordable taxes, facilities, etc. Some places, such as Germany, Holland and the Scandinavian countries, are, however, one step ahead. They have many highly progressive policies -in both supply and demand– designed to make the deep tech system work. The Fraunhofer Institute in Germany, for example, is a benchmark European institution for tech transfer and applied R&D. One of its many innovative features is the promotion of a novel funding model whereby the German government matches its funding in proportion to the number of external contracts won from industry or other governments. 

How do initiatives such as ATTRACT or The Collider promote tech transfer and what is their differential value?

ATTRACT is an experiment for bringing technologies developed for basic science out of the laboratory and finding alternative applications for them in medicine, energy, manufacturing, consumer electronics, etc. ATTRACT also focuses on raising public awareness that to be marketed deep technologies require a completely different mindset. This mission of dissemination is aligned with The Collider’s focus on tech transfer, education, awareness-raising and changing the mentality of agents involved in this ecosystem. 

What advice would you give to any deep tech scientist considering entrepreneurship?

Nobody can do everything. Trying to get a scientist to be a businessman is probably not the best use of resources. If you are a scientist and are not very interested in business, team up with someone who is and who also understands the science and technology you are dealing with.  

What motto could define your approach to work or life?

Be genuine! Life is too short to be somebody you are not.