Deep tech fundraising needs a different playbook

Picture a founder with three years of lab work behind them, a patent pending and a prototype that works. No revenue yet. They sit down with an investor and the first question is about monthly recurring revenue.

That’s the software playbook being applied to a company it was never built for. And in my experience, it’s one of the biggest reasons good deep tech companies take far longer to raise than they should.

The capital is there. The match often isn’t

The usual story is that UK deep tech is short of money. I don’t think that’s quite right, and I’m not alone.

I recently shared a stage with Tom Adeyoola, Executive Chair of Innovate UK, and his view was clear: “there is capital here”. The problem is a disconnect between that capital and an understanding of the technology it’s being asked to back. [1]

The data backs him up. Deep tech now takes a record 31% of all UK venture capital funding. [2] Money isn’t the problem.

The challenge is matching founders with the investors who have the expertise to price technical risk. The disconnect isn’t between founders and capital. It’s between founders and the right investors for what they’re building.

Why software metrics break down for deep tech

Software investing has a well-worn rhythm. Ship fast, measure revenue growth and retention, and back the companies where the numbers compound.

Deep tech doesn’t move like that. There are years of R&D before there’s a product. There’s regulation, manufacturing and long sales cycles. Judging that company on its revenue at seed is like judging a building on its rent before the foundations are poured.

Owen Thompson, CEO of Cambridge Future Tech, put his finger on the cultural side of this. He thinks UK deep tech VCs have a lower risk appetite than their US counterparts. His framing of the investor’s job: find and reduce risk where you can, “but not to refuse the presence of high risk”.

Risk in deep tech isn’t a red flag. It comes with the territory, and the best deep tech investors know how to manage it.

What deep tech investors should look at instead

So if not revenue, what? When I’m looking at a deep tech business as an angel, I focus on three things:

• The founder’s domain expertise. Have they lived with this problem long enough to know where the hard parts are?
• The IP and how well it’s protected
• Some form of traction. For deep tech, that doesn’t have to mean revenue. It can be pilots, paid trials or serious commercial interest

Owen’s non-negotiables overlap with mine: defensibility, access to market and the ultimate revenue potential. But he adds two personal ones I think are underrated, coachability and resilience. His ideal founder has been through it once, failed, and come back with a chip on their shoulder.

Tom brought it back to people. Vision first, then the product and value proposition, but ultimately it’s the team that decides it. In deep tech, where the plan will change several times before launch, that matters even more.

For founders: raise from people who price technical risk

This is where the fundraising process itself matters. Generalist investors do a great job backing the businesses their models are built for. But a deep tech founder pitching to them can spend months on conversations that stall on revenue questions their business can’t answer yet.

A few things I’d do before starting outreach:

• Look at portfolios, not just theses. Has this investor actually backed a pre-revenue technical company before?
• Ask how they think about milestones. Investors who understand deep tech will talk about technical de-risking, not just revenue targets
• Be upfront about the risk. The right investors will want to hear how you plan to reduce it

And don’t assume the right money is somewhere else. We’re never going to have as much capital as the US. But at the early stage, when you’re building the technology and working out distribution, the UK is a good place to do it.

The funding and venture infrastructure are here, especially early on. But that picture changes later on: UK investors take part in 57% of deep tech rounds at seed stage, but fewer than 10% at late stage, where US investors provide 59% of the funding. [2]

There are ideas on the table for closing that gap. Dr Christina Yan Zhang, CEO of The Metaverse Institute, argued at the panel that: “The Financial Conduct Authority and Bank of England’s May 2026 joint vision on real-world asset tokenisation creates direct pathways connecting £16.5 trillion in managed assets with a £2 trillion sovereign debt market. Unlocking even 1% of that £18.5 trillion pool into UK deep tech represents £185 billion in capital potential—over 30 times the £5.8 billion ($7.4B) the sector raised in 2025. Tokenisation and 24/7 liquidity will transform how deep tech is financed at scale”. [1]

Owen’s advice for later on is sensible too: when you do expand, choose where to base yourself by where your customers are, not where the funding looks cheaper.

Finding the investors who get it

The UK doesn’t need to invent a new pool of deep tech capital. It needs founders and investors who understand technical risk to find each other faster, so founders spend less time pitching to investors whose models aren’t built for pre-revenue technical companies.

That’s what we’re building at ThatRound: matching founders with investors based on what they actually back, so deep tech companies get in front of the people who understand them.

References

1. Show Notes 223: From Cambridge Tech Week 2026: How the UK Can Build Its Next Deep Tech Giants | Cambridge Tech Podcast — https://www.cambridgetechpodcast.com/post/shownotes223
2. State of UK Deep Tech 2025 | Royal Academy of Engineering and Dealroom — https://enterprisehub.raeng.org.uk/news-resources/reports/deep-tech-report-2025/