Deep Tech Renaissance: John Lee on Emerging Technologies and Capital Allocation

Introduction:

• John Lee is an early-stage investor focusing on deep tech, enterprise software, cybersecurity, AI/ML, and automation.

What is Deep Tech?

• Deep tech companies are similar to biotech companies in terms of capital structure.
• Unlike traditional tech startups, they have a longer incubation period to accrue value.

Capital Allocation and Business Models

• Scarcity of capital drives better business models.
• Interesting hybrid models exist that are designed to develop revenue in the near term.

Examples from the Portfolio

• Rare Base: Focuses on finding cures for rare diseases by characterizing cells and testing drugs on them. Sells IP assets as a novel business idea.
• Count: Aims to make accounting firms more efficient by acquiring existing firms and implementing AI techniques.

Innovation in Deep Tech

• Despite a renaissance in funding, deep tech has not yet penetrated the lives of ordinary consumers.
• The scarcity of capital is forcing companies to be more creative in their go-to-market strategies.

Notable Geographical Clusters

• San Francisco and Boston are significant clusters for deep tech companies.

Artificial Intelligence and Large Language Models (LLMs)

• LLMs are seen as collections of human intelligence trained on internet content.
• Emergent properties arise from the crosstalk across different nodes in LLMs.

Future of LLMs

• Doubts exist about the ability of current models to scale.
• OpenAI aims to develop models with 100 trillion parameters, although the feasibility of this is debated.

The Intersection of Science and Deep Tech

• Science is transitioning from an "artisanal" practice to an engineering discipline.

Application Areas

• Reproductive Innovations: Research is being conducted on how to effectively assist couples in having children later in life.
• Energy: A debate exists over the effectiveness of fusion vs fission in energy production.

Business Model Concerns

• Long regulatory approval times are a challenge.
• Jazz Venture Partners focuses on the convergence of deep tech and science, aiming for creative translation.