Inpho Venture Summit to highlight “deeptech”
Inpho Venture Summit was formed several years ago to encourage investment in photonics and Bordeaux, at the centre of a photonics ecosystem, was an obvious place to locate.
“That has expanded over time so that now the focus is on deeptech,” said George Ugras. Ugras is chair of the Inpho Ventures Summit and managing director of AV8 Ventures, a transatlantic operation with offices in Palo Alto and London. Prior to leading AV8 Ugras was head of IBM Ventures. “Unlike some other areas of venture capital deeptech is a cross-border phenomenon. Europe is an attractive market but this event also addresses the US market. It provides exposure to new technologies, good investment targets looking for growth in Europe and in the US.”
So is deeptech the same as hardware?
“Not quite,” said Ugras. “Deeptech entails fundamental breakthroughs in hardware or software, or both, and even clever system-level design using off-the-shelf components,” he added.
It is well known that ten-to-fifteen years ago venture capital largely turned away from hardware more generally and semiconductor investments in particular. The VCs fell in love with the Internet in the wake of the success of Google and Facebook and some others now forgotten. There are signs in the last five years that equity investment is returning to hardware, particularly to invest in artificial intelligence, but it is largely strategic investors that have taken up the slack.
“We’ve gone through a cycle where hardware fell out of fashion due to its capital-intensive nature. I’ve observed over recent years the take up of lower-cost ways to develop and deploy hardware. And the industry drivers around vehicle autonomy and robotics help,” said Ugras.
“Strategic investors are definitely a trend. A strategic investor may be interested in building up an ecosystem and be willing to take a higher risk than a venture capitalist. They may be taking the portfolio approach and backing multiple options to cover a solution space. They invest in a few to have an acquisition candidate,” Ugras added.
Next: Kraft work
Dieter Kraft, has been general managing director at Trumpf Venture Capital GmbH since January 2018 and plans to be at Inpho Ventures to survey deeptech opportunities. Trumpf is a family-controlled precision machinery company and Kraft joined to help them implement a corporate investment programme. Prior to joining Trumpf Venture Capital Kraft was an investment partner at Robert Bosch Venture Capital GmbH.
“Larger corporations have been positioning themselves as strategic investors for a couple of decades. You need to consider the startup scene as part of an open innovation policy,” said Kraft. “By getting involved in the startup scene you get to see things early and can take a position as to whether it is good for your mother company.”
Despite the return of equity investment and the presence of strategic investors Europe has a rather poor track record of providing a return on investment. Is the situation changing and can the Inpho Venture Summit help?
“There are a couple of well-known arguments: the ecosystem in Silicon Valley has been present for a while. There are entrepreneurs who have been successful who want to give back by being investors. But it is not a quick thing and is not observed yet in Europe,” said Kraft.
He added: “There is more capital in the US but the capital efficiency is far worse than in Europe. The efficiency of technical innovation is better in Europe but the willingness to take on risk is under-represented in Europe.”
Kraft is also clear that hardware is an important investment target. “If you only direct your money into software it is a dead-end in terms of functionality.” Kraft argued that hardware is the next generation of software functionality and hardware makes the technology much more defensible against competition.
Kraft also sees Bordeaux as a good location for the Inpho Ventures event. “Bordeaux is a photonics location in Europe but it is opening up to broader hardware emphasis,” he said.
Next: Ugras concludes
Ugras continued: “We are very bullish about Europe and Israel. We believe there are very good deeptech thinkers and development engineers in the geography.” The main failure mechanism for startups is around go-to-market and distribution, Ugras said. It’s about getting the product market-fit, product management and scaling up. Those skills are prevalent in Silicon Valley but are starting to come up in other geographies, he added.
Ugras pointed out that Eric Benhamou, a former CEO of 3Com and prominent venture capitalist is attending Inpho Ventures Summit. Perhaps more interesting to our readers is that Benhamou began his career in 1977 as a software engineer at Zilog where he worked on the industry’s first first microprocessor-based local area network – the deeptech of its day.
“We feel very good about the diversity we have at this year’s conference in terms of topics and people. It’s a great place to get a sense of what’s happening,” Ugras concluded
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