Making Moonshots A Reality: Why One Super-Angel Investor Is Going All In On Deep Tech
5 min read
Originally published on Forbes by Renita Kalhorn
“With the release of ChatGPT, Northvolt becoming one of the most valued European unicorns, and SpaceX winning contracts with their Starlink satellite network, we finally have examples proving the power of deep tech at scale. What seemed like crazy moonshots are now bringing to market transformative technologies and new infrastructures — as well as, crucially, financial returns for early backers."
These are the words of Francesco Perticarari, founder of Silicon Roundabout Ventures, a VC fund leveraging a community of 15,000 founders and engineers to back deep tech and big data startups.
We met in London at the inaugural Frontier Deep Tech Conference, founded by investor Cristina Esteban to bring together players from across the deep tech ecosystem.
In his keynote, Francesco declared that now is the moment to invest in deep tech – the engineering and scientific innovations that will revolutionize our world.
I spoke with him afterwards to learn more.
Renita: For many VCs, the barrier to investing is that they don’t know how to evaluate the potential of transformative technologies. How did you make the shift from computer scientist to deep tech investor?
Francesco: While working full-time as a developer, I was getting excited about advancements in computing, from AI to Quantum Computing, as a radical alternative to the way current processors work. Parallel to that, I started building Silicon Roundabout as a deep tech community of scientists and founders. That led me to start angel investing and eventually to launch an angel fund.
Renita: So where was the inflection point in terms of going all in on deep tech?
Francesco: At a certain point, I felt I couldn't keep the deep tech community active, be an angel investor and fulfill my responsibilities as a full-time developer. And when push came to shove, I didn't want to lose the community and I definitely wanted to bring more capital to deep tech. So I realized I was gonna have to quit my job.
Renita: Wow, that took real conviction.
Francesco: Yes, I genuinely believe I'm backing future pioneers and I want to be part of their story. We also need diverse approaches when investing in deep tech.
Renita: Definitely, can you elaborate?
Francesco: Well, as an asset class, venture capital is driven by "power law" returns, by the outliers. That means you've got to explore niche opportunities. And the best way to do this is to scout for unusual combinations of people and technological insights who have the technical expertise to challenge the way things have been done.
Renita: Right, so much of VC is about pattern recognition. If you're in your own little box, it’s difficult to see things differently.
Francesco: Exactly. So for instance, the last investment I made was in Anaphite, where one founder has a physics background and the other a chemistry background. Working together, they had a breakthrough with graphene. They started experimenting with different applications and one of them happened to be batteries. Now they’re building a company to enhance Li-ion batteries with graphene, which has the potential to enable electric vehicles to fast-charge in five minutes – at lower cost and at scale – within this decade.
This unusual combination of physics and chemistry led them to a breakthrough, and now, they've convinced me and other investors to give them money so they can take it outside the lab.
Renita: So they didn't start by saying, “We want to build better batteries.” They had the technological breakthrough first and then asked, "What can we do with this discovery?"
Francesco: Exactly. And, what’s important is, they looked at various potential applications to find an answer before looking to scale. When results were promising with batteries and there was also a compelling problem it could solve in the automotive sector, it was the right mix of a big problem and breakthrough technology.
Renita: And a great example of the power of cross-pollination in deep tech.
Francesco: Yes, not only do deep tech innovators have an edge because they can patent specific breakthroughs, but having a combination of different perspectives is in itself a competitive asset.
Renita: So with software, there isn’t as much potential now for breakthrough innovation?
Francesco: Well, there are areas where new types of algorithms could be created that operate better than what a traditional software company could create.
Roseman Labs, the cybersecurity startup that won the competition at the Frontier conference where we met is a good example. They're developing multi-party computation so that organizations can combine their data sets without revealing sensitive input data. The solution they need is not available out of the box.
Renita: Last question: Deep tech solutions are complex and require integration of multiple technologies — no one company will be able to create a complete solution on its own. Being able to collaborate with other players in the ecosystem is critical to the speed of development and success of deep tech start-ups.
How do you think about building community in deep tech?
Francesco: If we want deep tech to be more scalable and have a huge impact then we have to have a network of investors, founders and other entities – hubs creating a compound effect where investors specialize in different aspects, investing with each other, creating healthy competition. where startups could become customers of each other.
Increasingly, companies and investors are realizing there is more to gain by foregoing short-term profit for long-term partnerships and supporting each other to create a huge exit.
If Deep Mind were a startup today, they might not have been so keen on being acquired by Google if there had been the network potential to grow.