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Accelerating Deeptech – A Demand Supply Analysis Theory
Accelerating Deeptech – A Demand Supply Analysis Theory

December 18, 2023

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Deeptech is becoming more popular over time. The journey began with a small number of start-ups and corporations adopting it, and now the ecosystem is employing it in many of their critical business areas. Deep technologies such as AI, blockchain, IoT, quantum, robotics process automation (RPA), 3D printing, and others can help increase consumer engagement and operational utilisation.

Focusing on demand-supply analysis is a crucial aspect of boosting deep technology adoption. This demand-supply study is very dependent on market dynamics and conditions. However,  for Deeptech products to accelerate quicker, this demand-supply balance must be maintained.

Supply Side Analysis

  1. Strong Deeptech Landscape

Supply is about making technological solutions available so that stakeholders can adopt them. Deeptech start-ups that build innovative and inventive solutions play a key role:

  • 3300+ Deeptech start-ups in India grown at >50% CAGR over the last ten years.
  • 1/3rd Deeptech of start-ups are in Enterprise Tech and BFSI sectors.
  • ~500 inventive Deeptech start-ups, inventive Deeptech start-ups have higher density of Deeptech talent.

The data shows that the Deeptech landscape is promising, and a lot of technically innovative solutions exist in the ecosystem for utilisation.

Indian Deeptech offers solutions to a variety of use cases in different business areas.

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  1. Scaling landscape face certain challenges

Even as the use of Deeptech grows, certain start-up challenges linger. Convincing or raising from investors is difficult due to obstacles such as product infancy, longer gestation period and more.. With Corporates, challenges like lengthy onboarding process,  integration issues and lack of trust are some of the hindrances for startups.

  1. Investor – Market focussed but a great mentor for start-up growth:

Deeptech, of course, necessitates patient investment from investors, but the business should also demonstrate the commercial potential of the Deeptech use case in the future so that investors will continue to invest for a longer period. Every fund has a life cycle, and investors can only stretch so far before they lose faith in the market.

  1. Addressing talent demand supply gap:

In Deeptech start-ups, there is a significant disparity between talent need and supply. In comparison to AI and Big Data, the gap is more pronounced in technologies such as Blockchain, Drones, and AR/VR, where skill requirements are more specialised.

  1. Promoting start-ups from emerging hubs:

In the previous ten years, at least one Deeptech AI start-up is set up in more than 85 cities across India. Deeptech AI start-ups b in emerging hubs increased significantly from 13% in 2019 to 22% in 2020 and 26% in 2021. There is a strong need to provide the required infrastructure and support to these start-ups from smaller towns.

  1. Verticals focussed Deeptech:

Creating vertically focused Deeptech goods can also aid in the expansion of this ecosystem. Year after year, many verticals have acquired prominence in the given market conditions, resulting in the development of Deeptech products to meet the need. Deeptech start-ups raised investment across use cases such as drone delivery, autonomous delivery bots, cold chain monitoring, and fleet management in 2021, making SCM and Logistics the most financed sector. Patient health record analytics, supply chain management, AI-based neo banking, driver safety monitoring, and farm intelligence solutions received the most financing, accounting for 40% of the total. The Agri-tech sector will see a surge in funding in 2021 because of various early and late-stage fundraising rounds.   

  1. Lowering computing infrastructure cost:

Deeptech is a highly specialised field that necessitates extensive computing infrastructure and professional support, which many start-ups lack. Because of these limits, start-ups s challenged to develop a technologically advanced product within a reasonable timeline. Such infrastructural assistance should be offered to start-ups for them to advance on this journey.

  1. Increasing collaboration with Academia:

Deeptech startups require counsel and aid with patent filing, trademark, service mark, and copyright registration. One-on-one research mentoring from domain experts, alumni mentors, and local entrepreneurs can assist founders gain exposure to technology applications. Because start-ups cannot afford office rentals, Academia can help them by providing on-campus subsidised rental offices and facilities such as high-speed internet, conference rooms, etc.

 

A diagram of a supply and demand

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Demand Side Analysis

Accelerating Deeptech demands the active participation of all ecosystem players, which is becoming increasingly clear.

  1. Demand Creator - Corporates

Corporates that potentially generate significant demand for Deeptech technologies are concerned about these technologies. Some of the important challenges that corporations consider when collaborating with Deeptech start-ups are security, trust, longevity, reliability, investment and more.

A considerable number of corporations are also actively consuming Deeptech solutions. Large Indian organisations are actively working on  use cases such as cloud vehicles, enhancing employee efficiency, setting up in-house ChatGPT, speech-to-text translation, contract paraphrasing, data masking, and building huge language models, among others. Deeptech is adopted through in-house R&D or active investment in start-ups.

  1. Demand creation needs correct approach:

The key to these active engagements, however, is to create the proper structure. Deeptech firms active on Deeptech adoption, have a formal technology council team, a defined strategy, identified use cases, an in-house product development unit, and so on, putting them ahead of the pack in terms of tech adoption. They have reduced the time it takes to onboard a startup, from months to days. Acquisition strategy has enabled organisations to gain faster access to goods, people, and platforms that would have taken a long time to develop to the same level.

 

  1. Proof of Concept (PoC)

PoC may appear to be a simple term, but it can assist corporations in understanding the capabilities of the Deeptech start-up while allowing them to work on their issue statement. Starting with PoC is the best option of corporates who would like to start small with minimal risk before they enter a long-term agreement.

  1. Creating global demand

India has made its mark in the global start-up ecosystem, but many organisations around the world are unaware of the capabilities and innovation that Indian startups can offer. To address this gap, ecosystem stakeholders recommend sending  start-up delegations from India to highlight Deeptech solutions around the world. Frequent initiatives can be planned so that Indian start-ups get ample opportunities globally.  

  1. Indian consulate to take the lead:

Indian consulates in other countries can come up and aid Indian start-ups in showcasing their products in those nations. The presence of Indian consulates in numerous locations should be used to help scale our entrepreneurial environment.

  1.   Targeted policies and strategies to accelerate Deeptech adoption across sectors:

The National Blockchain Framework is a shared blockchain-based infrastructure for enabling citizen services and cross-domain applications. NITI Aayog focuses on undertaking AI-based proof-of-concepts for designing a national strategy for building a vibrant ecosystem and collaborations with experts and multiple stakeholders for AI adoption. The government role can be transformed from regulator to enabler.

While stakeholders should work to help Deeptech startups in their growth, they should also work to increase demand for Deeptech goods. For deeper and more consistent consumption of Deeptech products in organisations, demand and supply must work in unison. Problems raised above were discussed at a recent roundtable at the Nasscom Future Forge 2023 event. CxOs, Industry professionals and founders attended this event.


 


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