Spotlight on AI and Energy: Deeptech’s 2023 Outlook

Before last year, investors expected it to be 2022 “general deeptech”. And despite the economic downturn, European tech has already seen record investment, says Manjari Chandran-Ramesh, partner at Octopus Ventures.

“Macroeconomic drivers are focusing capital on the realm of digital technology, and rightly so, as many solutions to today’s problems can be addressed through scientific innovation,” she says.

In 2022, Europe will receive five deeptech unicorns It has seen several mega compounds from deeptech companies including battery maker Northvolt, carbon capture company Climeworks and Einride freight traffic start. European e-tech companies raised more than $16 billion last year, and they’ve done just that They continued to increase their number While other technology sectors were as well Layoffs flooded.

So what can the sector expect this year? Sifted has asked investors to share what European deeptech has in store for 2023.

Among their predictions, experts have repeatedly raised four major areas of deeptech: energy storage, artificial intelligence applications, defense technology, and quantum computing.

Battery technology will highlight

Milena Sanchez, Director and Vice President of Impact at AENU

If we thought the energy crisis was bad in 2022, wait until 2023. With the current rate of consumption and the geopolitical and macroeconomic environment looking dull, Europe is likely to deplete its energy reserves.

Doubling down on energy optimization will be a major climate technology priority. Partly out of necessity, energy storage will gain momentum, especially on an industrial scale. The second and second new dry powder batteries will make use of the climate giant’s capital.

lithium ion substitutes Power storage of energy – from alternative metals to new technology such as flow batteries – will also get more attention. I would expect undiluted financing to be a key factor in establishing the venture capital case for such alternatives.

Milena Sanchez, Director and Vice President of Impact at AENU

Artificial intelligence will expand to include the neighborhoods, energy and cybersecurity sectors

- Markus Kreßmann, partner at HTGF

We expect AI to be an important technology across all industries. A big step forward can be expected here in the near future. For example, AI can be used to decode complex biological processes or it can be applied in the energy sector to control renewable energy generation as well as decentralized electricity grids.

Moreover, IT security solutions will be in the spotlight next year, as they are essential to the safety of our economic and social infrastructure. There is a growing demand for advanced threat detection capabilities as well as automated testing and analysis platforms.

– Markus Kreßmann, partner at HTGF

Expanding the scope of quantum computers

Manjari Chandran-Ramesh, Partner, Octopus Ventures

Quantum computers continue to advance with an increasing number of physical qubits interconnected across the various applications of qubits. As these systems expand in scale, the need for interconnection and quantum correlation becomes increasingly apparent. Distributed and networked quantum computers through innovations in quantum transducers, repeaters and switches will enable this measurement.

With advances in quantum technologies, there are inevitably additional risks in the security space apart from the security challenges that already exist. NIST has introduced new post-quantum cryptographic standards, replacing existing ones encryption It will be a huge task and an opportunity at the same time. We also expect to see innovation around encryption and security and AI is likely to play an ever larger role in this space.

More widespread applications of artificial intelligence

Narrow AI [AI applied to specific tasks] It has found its way into many sectors but there are still a lot of industries that can benefit from the advancements of AI. We expect to see more AI in many sectors such as agriculture, healthcare, and cybersecurity. As these models become more complex, the machine learning operations (MLOps) space is likely to see further advances. Advances in Artificial General Intelligence [AI that can learn to handle multiple tasks] It will bring her ethical considerations.

– Manjari Chandran-Ramesh, Partner, Octopus Ventures

Ongoing investments in quantum computing

Antoine Blondeau, Managing Partner of Alpha Intelligence Capital

Europe has historically lagged behind the United States, and to a lesser extent China, in developing quantum computing technologies — both in terms of hardware and software. This is changing quickly with the emergence of an increasingly large number of well-funded startups such as Plancq (Germany), Pasqal (France), Universal Quantum (UK/Germany), Quantum Circuits (USA) and Quandela (France/Germany).

Given the aspects of sovereignty in the quantum computing race, we expect sustained investments in companies based in Europe with relatively high valuations, and a push to create a business and partner ecosystem around these companies.

Artificial intelligence will enable battery management

With global energy supply concerns, the ability to optimize energy consumption has become critical. Likewise, for the electric vehicle market to fulfill its potential, the industry still needs to invest in battery management system layers that are context sensitive and can comprehensively manage not only battery capacity reduction but also battery charging. AI is critical to delivering both use cases.

We expect major companies in the energy, building management, automotive and mobility industries, including their supply chains, to invest heavily and acquire assets in the AI-enabled space.

Generative AI will reach Europe

AI technology will be used to create content based on language, image and video and make an impact on anything related to marketing and customer interaction. AI-powered content creation is currently at the tip of the iceberg and will evolve into a plethora of content possibilities, including interactive and dynamic content, as well as films that adapt to each viewer.

– Antoine Blondeau, Managing Partner of Alpha Intelligence Capital

A new wave of healthcare and defense applications

Inka Mero, Founder and Managing Partner at Voima Ventures

The next big wave in biotech will be in biotech and health. We’ll see both predictive and accurate diagnostic treatment companies, as well as a new wave of drugs and treatments designed specifically for women.

In addition, the economic downturn, war in Europe, and rising tension between East and West will lead to innovations within European sensor, space technology, hardware, data, and AI companies, with an emphasis on technology with dual-use cases.

– Inka Miro, Founder and Managing Partner at Voima Ventures

The technology sector is entering clinical trials

John Cassidy, partner at Kindred Capital

In 2023, we will see at least one private tech company acquire traditional biotechnology to increase its efficiency in clinical trials.

In the past two years we’ve seen AI-designed drugs reach Phase 1 clinical trials – ExentiaAnd Insilico and Recursion are leading the charge. Generative artificial intelligence Large language models have the potential to augment these efforts. Alpha Fold was the scientific breakthrough of 2021 but this is only the beginning.

However, companies started as technology platforms often have a lot to do before launching their own clinical programs. It’s not as simple as hiring a couple of experts and pressing fast – the processes, policies and experiments meant to ensure drugs don’t cause harm can be foreign concepts to machine learning and engineering-led companies. There is a big prize for the first technology platform companies to see this gap in their capabilities.

– John Cassidy, partner at Kindred Capital

Metaverse arrives at the workplace

Isabel O'Keeffe, Partner at Sure Valley Ventures

The metaverse is not one continuum but an interaction between digital platforms, products in Web2 and Web3 and how they are consumed. The evolution of devices such as VR headsets, digital glasses, smartphones, and other devices are acting as enablers and will allow users to access 3D virtual or augmented reality environments where they can work, connect with friends, conduct business, visit remote locations, and access educational opportunities, all in a technology-mediated environment. in new and immersive ways.

One area to watch the metaverse is the workplace. Companies like Nvidia, Microsoft and one of our portfolio companies, Engage XR, have developed platforms to collaborate on digital projects. The use of AR and VR for training in organizations will continue to grow in 2023.

– Isabel O’Keefe, partner at Sure Valley Ventures

Technology leaps across deeptech sectors

Benedikt von Schoeler, General Partner at Vsquared Ventures

We anticipate exciting developments in 2023. To name a few, breakthroughs in materials science will power the next generation of batteries with new levels of performance that make exciting use cases such as electronic flight commercially attractive. The wide availability of empirical data and new prediction models will lead to fascinating new developments within techbio.

The fields of AI-powered automation and robotics seem to be offering more and more long-term promises of significant actual productivity increases. And last but not least, 2023 will see the launch of the first private European rocket into low Earth orbits, ushering in a whole new era and impetus for the European space ecosystem.

European technology will strive for supremacy

The momentum towards greater national sovereignty and European autonomy will only increase. As such, defense spending will also become a more important driver similar to the US. While these underlying trends will lead to more government support and spending, the strategy for the deep tech company on how to position itself in the new reality will become even more important.

– Benedikt von Schoeler, General Partner at Vsquared Ventures

Clara Rodriguez Fernandez is a Sifted deeptech reporter based in Berlin. follow her linkedin.

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