LPs Signal Preference for Longer Deeptech Fund Cycles
International limited partners are increasingly favoring longer fund durations of 12-15 years for deeptech and climatetech investments, according to recent commentary from fund managers. This shift reflects an understanding that hard science ventures require more time for commercialization than typical SaaS companies, and LPs expect return profiles to match these extended timelines.
- Deeptech ventures require significantly more time and capital to generate revenue, often taking 35% more time and 48% more capital than traditional software startups. The average time between funding rounds is also longer, with deep tech startups taking an average of 25% to 40% more time to progress from seed to Series D. - The pathway from academic research to a fundable startup is a significant hurdle; in Europe, many deeptech innovations "perish in the valley of death" due to a lack of later-stage growth funding. Of the roughly 400 deeptech spin-offs from European research institutions in recent years, only 22% managed to secure follow-on funding. - University tech transfer offices (TTOs) can be a bottleneck in the commercialization process. Many European universities take large equity stakes of 15-25% in their spin-offs by default, which can discourage founders and make the startups less attractive to external venture capital investors. - The €1 billion NATO Innovation Fund (NIF), backed by 24
