Deep-Tech Startups & Fund Strategy: Insights from Vsquared – Thomas Oehl, Vsquared Ventures

About this episode

Thomas Oehl from Vsquared Ventures recently launched a new €160 million fund and shares insights into the world of Deep-Tech investments on the Unicorn Bakery podcast. The discussion illuminates not only the unique characteristics of Deep-Tech startups but also the strategic considerations behind Venture Capital funds.

What Makes Deep-Tech Startups Special?

Deep-Tech startups differ fundamentally from traditional business model innovations or B2B SaaS companies. While the latter often build on proven technologies and primarily develop new business models, Deep-Tech startups are based on scientific breakthroughs and technological innovations that often require years of research and development.

These differences become particularly evident in follow-on funding rounds. Deep-Tech startups frequently need longer development cycles and higher capital amounts before they can present market-ready products. The valuation logic follows different parameters than software companies, where metrics like ARR or Customer Acquisition Costs are in the foreground.

The CTO Question: Build Internally or Hire Externally?

One of the central questions for Deep-Tech founders is technical leadership. Do you need a CTO in the founding team from the beginning, or can you bring in this expertise later? The answer depends heavily on the type of technological innovation.

In highly specialized Deep-Tech areas, a CTO with relevant expertise is often indispensable. The complexity of the underlying technology makes it difficult to fill this role later without fundamental understanding already present in the founding team.

The discussion around No-Code/Low-Code solutions is also interesting. While these tools democratize development in many areas, they quickly reach their limits in Deep-Tech applications. The specialized requirements usually demand custom solutions.

Founder Personalities in Deep-Tech

The personality profiles of Deep-Tech founders often differ from those of traditional startup founders. While business model innovation is frequently driven by market-oriented entrepreneurs, Deep-Tech founders often come from academia or have deep technical expertise in their field.

But how much expertise is really necessary? The balance between solid foundational knowledge and a healthy dose of naivety is crucial. Too much knowledge about all the hurdles can be paralyzing, too little can lead to unsolvable problems. Successful Deep-Tech founders often bring a mix of technical excellence and entrepreneurial optimism.

Opportunities Without a PhD: Young Teams Can Succeed Too

An important insight: Not every successful Deep-Tech startup needs founders with PhDs or decades of engineering expertise. Young founding teams can certainly be successful if they bring the right mix of willingness to learn, perseverance, and strategic thinking.

What's crucial is the ability to quickly dive into complex technical areas and win the right experts as advisors or team members. The art lies in creating opportunities that lead to VC success despite intense competition.

Fund Strategy and Investor Selection

Various factors play a role in investor selection. Cross-referencing between different funds and other founders can provide valuable insights, but sometimes you need to be pragmatic and choose the fund whose commitment you have.

Pro rata investments and the strategic considerations behind them show how much "politics" is involved in Venture Capital decisions. For founders, it's important to understand these dynamics and navigate accordingly.

Impact and Vision: The Drive Behind Deep-Tech

Deep-Tech startups often have the potential for significant societal impact. But how do investors ensure that founders are truly passionate about their vision and will follow through? The answer lies in the authenticity of the mission and the willingness to persevere through difficult phases.

The current market situation has influenced fundraising, but fundamental Deep-Tech innovations continue to find investors. What's crucial is the ability to communicate the long-term vision while defining short-term milestones.

For entrepreneurs considering the Deep-Tech path, the key takeaway is clear: while the challenges are substantial and the timelines longer, the potential for meaningful impact and substantial returns remains strong for those who combine technical excellence with entrepreneurial execution.