From your personal computer to the food you consume and the car you drive, deep tech innovations are everywhere. Early-stage investments in promising new deep tech solutions are key to driving disruptive technological progress. However, how do technological innovations scale from small technical teams to solutions that address the biggest challenges of our time?

We recently discussed this question with Sander Verbrugge, partner at deep tech venture capital firm Innovation Industries. We talked about how he became a venture capital investor. In addition, we discussed why he is passionate about deep tech and what challenges he sees in scaling promising innovations.

You have had a career as an academic, strategy consultant, and business developer in the semiconductor industry. How did you end up becoming a Venture Capital investor?

My career principle is straightforward: I choose what gives me joy and energy. At the same time, I use past experiences to guide future decisions.

After completing my studies, the academic world captivated me. Therefore, I pursued a PhD. Although I finished it, I discovered that lab life did not suit me. Inspired by acquaintances, I then moved into consultancy. It took time, but training and supportive colleagues helped me adapt. As a result, I spent six years at Roland Berger, surrounded by ambitious and energetic peers.

Later, I started missing the world of technology. Therefore, I joined NXP in Eindhoven, a hub for leading high-tech industry players. Moving into venture capital was not planned. However, I met someone who shared my enthusiasm and introduced me to Innovation Industries’ DNA of actively supporting companies. By combining my background in physics and consulting with semiconductor sector experience, I found real fulfillment in this role.

What exactly is deep tech, and why do you choose to invest in it?

Deep tech is an umbrella term. Not long ago, people often referred to it as high tech, before software companies adopted that term as well.

To me, deep tech means a technological advancement that almost always includes a hardware component and enables something truly groundbreaking. Software plays a role in most deep tech products. However, the essence of deep tech lies in hardware innovation.

As a result, deep tech can create unique products that disrupt existing markets or even enable new ones. The technology can come from many fields, such as chemistry, physics, biology, or materials science. In short, any source of cutting-edge technology research can become the foundation.

Why do venture capital investments in the deep tech space make sense?

Ultimately, significant capital directed towards a specific goal can create new and disruptive products. That kind of capital holds real power in our society.

I have always been intrigued by how technology can transform the world in a positive way. Joining Innovation Industries gave me the opportunity to help select potentially disruptive technologies. In addition, I can support promising teams and help bring them to maturity. With deep tech, we can create disruptive changes that may have a profound impact on society.

What are the most promising disruptive deep tech ventures in your portfolio?

Among our investments, we have many potentially disruptive ventures. Some focus on CO₂ reduction, clean energy, and food security.

For example, one venture is working on technology to capture CO₂ from the air in an energy-efficient way. Another develops inherently safe batteries with enhanced charging capacity. This supports the growing trend of electrification. There are many more promising portfolio companies, but these two are especially appealing from an impact perspective.

Another start-up that excites me is Solynta, even though I am not an expert in this field. The company is developing a hybrid potato. It can improve the functionality of potatoes through natural seed breeding.

For instance, Solynta can offer starch-rich potatoes that contribute to the circular economy. It can also develop potatoes that grow in arid areas and help address food shortages. Because potatoes have a lower water footprint than rice or wheat, they are a strong option as a primary food source.

What are the biggest challenges you see in scaling up proven yet small-scale deep tech ventures?

Challenges vary across sectors and products. However, deep tech start-ups often need to navigate several difficult phases.

Commercialization is one common challenge. Commercial professionals need to market and sell the product effectively. Even if a product is innovative, a start-up still needs hard work and strong marketing to generate sales. Experienced commercial experts can also build an effective go-to-market strategy. As a result, the company can grow aggressively while limiting the need for additional investment.

Product specification is another challenge. Teams need to carefully consider customer needs. This ensures that the product aligns with market expectations. Naturally, this needs to happen early in the process.

Finally, there are market-dependent value chain challenges. For example, companies may need to meet strict reliability standards for healthcare products. In other cases, they may need to gain market share against a few very powerful incumbents.

We are witnessing a change in the economic climate this year: interest rates are rising, and less money is being spent. Does this have an impact on VCs?

Economic fluctuations affect VC firms. However, I believe the deep tech sector is less volatile than some other sectors because it has a long-term investment approach.

Fundraising remains strong for our fund and others in Europe, even though it is definitely harder than a few years ago. However, portfolio companies do face challenges. Securing funding takes longer. In addition, some target markets are moving into reduced growth or even shrinking phases.

Lastly, do you have any advice for individuals aspiring to pursue a career in VC?

First of all, you need to be passionate about investing in start-ups and scale-ups. To explore VC roles, seek guidance from your network.

At Innovation Industries, we value a blend of technological expertise, business acumen, and sector knowledge, especially for more senior roles. However, this can and will be different for other VCs.