Deep tech is often framed as slow, complicated, and capital-hungry. But according to Main Sequence partner Elaine Stead, the bigger problem is that Australia still doesn’t fully understand what deep tech actually needs and why it matters.
“We tend to treat deep tech like a cost centre — something for grants or government programs, not serious venture capital,” Stead said to SmartCompany.
“But deep tech is already driving new industries. It’s where the next wave of global competitiveness will come from.”
Unlike SaaS products, which the Australian startup and VC ecosystem was arguably built on, deep tech isn’t fast.
“Historically, venture capital has always been a long-horizon investment class,” Stead said.
“We just got used to faster returns during the SaaS wave because product development became cheaper. But that was the exception, not the rule.”
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That mindset shift matters because deep tech startups don’t just need early capital. They need infrastructure, later-stage funding, and investors who understand how to support companies beyond proof of concept, into the scaleup phase and beyond.
“We’ve made huge progress. Blackbird, Brandon Capital, and Main Sequence are all backed by super funds now,” Stead said.
But she argues there’s still a major gap when it comes to scaling: Australia lacks the capital diversity required to build and finance the infrastructure deep tech ventures need to reach global markets.
According to Cut Through Venture data, deep tech attracted just $186 million in local venture funding in 2024. This made it the eighth most-funded sector of the year.
That figure was up just 1.4% on the previous year and still sat well behind fintech ($947 million), climate and clean tech ($609 million), biotech and medtech ($347 million), and enterprise software ($235 million).
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The acknowledgement of this gap certainly isn’t new. Former Tech Council CEO Kate Pounder made a similar point at SXSW Sydney in 2023, warning that scaling deep tech ventures requires a fundamentally different funding profile than the SaaS success stories Australia is more familiar with.
“They need physical space, a substantial amount of capital, specialist equipment. That’s a very different model to a software company that can grow fast without capital-intensive investments,” Pounder said at the time.
Even with a strong research base and standout raises in biotech and quantum, Pounder cautioned Australia’s real test is whether it can scale these companies to a global level, and whether business models, infrastructure, and policy settings are keeping pace.
Stop blaming universities
There’s a long-running tendency to blame universities for Australia’s commercialisation shortfalls. But according to Stead, that view misses the real issue: a shallow ecosystem and a lack of structural support.
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“Universities and research institutes are unfairly blamed for our commercialisation struggles. The real issue is that the broader system lacks the depth and complexity needed to support research translation.”
It’s a view echoed by current Tech Council CEO Damian Kassabgi, who recently warned Australia’s research pipeline (and potential to make billions) is at risk without structural reform.
He pointed to countries like the United States, where universities such as Stanford actively support researchers to pursue commercial outcomes from day one. Comparatively, in Australia, publishing seems to remain the dominant incentive.
“Commercialisation doesn’t necessarily mean the researcher has to become the CEO,” Kassabgi told SmartCompany.
“But their funding, the support they’re getting—it should be tied to thinking about market potential, not just publication metrics.”
Part of the problem is financial. Australian universities aren’t adequately funded for commercialisation and often rely on overheads to support tech transfer activity. But Stead says it’s also a function of our industrial base.
“Australia’s private sector is dominated by SMEs focused on survival, and a few big players in mining. That limits the number of natural industry partners who can pick up and run with complex research outputs.”
Without a more diverse industrial foundation and capital that supports companies past prototyping, the funnel from research to market narrows dramatically.
Both Stead and Kassabgi argue better bridges are needed between research, capital, and execution, alongside policy reform that aligns incentives across the system.
“We need stronger global ties, deeper local capability, and programs that connect researchers with implementation teams early,” Kassabgi said previously to SmartCompany.
“Otherwise we’re just leaving potential on the table — especially in sectors like quantum, clean tech and medical innovation.”
Deep tech requires imagination and real-world problem solving
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Stead says successful deep tech investing requires a combination of imagination and realism. The tech is important, but only if it solves a real customer problem in a commercially viable way.
“Technology is just a tool. If it doesn’t make a customer more competitive, faster, or more profitable, it won’t get adopted.”
She warns that both founders and investors can get distracted by novelty, rather than focusing on what a customer actually needs to switch.
“Investors and founders can sometimes miss crucial signals by falling in love with the technology itself. This can lead to overlooking critical questions, such as whether the product must reach price parity with existing solutions for customer adoption, or if its success hinges on customers completely overhauling their manufacturing processes.”
That’s where early-stage guidance matters. Connecting founders not only with capital, but with regulators, enterprise partners, and industry insiders who can help define market readiness long before a product launches.
“Some of these companies will eventually serve enormous markets, but the use case isn’t always obvious at first. Investors need to have the vision to see the future — but not too far into it. You have to be Goldilocks.”
Sovereign capability makes deep tech investment more urgent than ever
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The call to better support deep tech isn’t just a venture capital issue, it’s now a matter of national policy.
Following Labor’s re-election, sovereign capability has become a formal government priority, with the Department of Industry tasked with overseeing Australia’s ability to independently develop and scale critical technologies.
This shift reflects growing geopolitical and economic pressures, as countries around the world move to secure domestic control over AI, advanced manufacturing, and strategic infrastructure. For deep tech founders and investors, it raises the stakes.
“To ensure that our deep tech companies can stay in Australia for longer, and service a global market, we need larger pools of capital — ideally across a broader spectrum of technology disciplines, and for different stages,” Stead said.
“We still see a gap in later-stage and growth-stage capital, so what the industry needs is greater diversity in options for project financing and infrastructure financing too.”
If Australia wants to build sovereign capability, it needs to back the technologies and the teams developing them. That means serious investment in infrastructure, scale-up capital, and a more mature innovation ecosystem that can translate cutting-edge research into competitive, export-ready businesses.
It also means thinking beyond short-term returns. As Stead puts it, the most transformative deep tech ventures don’t just make noise — they make markets. But only if we let them.
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