London Tech Week day 4: Why deeptech will define the UK’s economic future
On day 4 of London Tech Week attention turned to deeptech, writes Russ Shaw
In the second half of London Tech Week, the focus shifted from the strengths of London today to the promise of tomorrow.
Today I had the pleasure of visiting the Royal Aeronautical Society, which embodies the rich history of British innovation while keeping one eye on the future. Over the course of this week, there has been a natural focus on the quick and immediate wins – but this should not come at the expense of strategic, long-term thinking.
London has a long history of innovation, stretching from the Industrial Revolution to now. With Deeptech, it’s possible to glimpse what the next step of that journey might look like.
Deeptech as a catalyst for growth
Deeptech refers to transformative technologies, particularly in fields like AI and quantum computing, that offer breakthroughs to solve global problems. As such, it requires significant research and development.
While Deeptech may have relatively low market risk, as the value of the proposed tech is readily apparent, there are engineering, business and timeline concerns that other startups may not have.
Deeptech is how major tech IP is developed, making it incredibly valuable to the long term strength of any economy. IP itself creates and sustains entire sectors, and IP-intensive industries grow at a rate faster than the national average, bringing high-paying jobs into the economy.
While these benefits for the UK economy may not be immediate, they are certainly worthy of investment, securing our position as a hub of innovation and scientific excellence.
The UK at the frontier
With its world class university and spinout scene, innovative tech ecosystem, and a government heavily invested in tech as a vehicle for growth, the UK is well placed to benefit from deep and frontier tech.
The UK routinely attracts more than £5bn in annual VC funding, driven in part by its exceptional universities and academic research. University spinouts contribute significantly to the deeptech sector, comprising nearly 14 per cent of high-growth firms, with Oxford University alone generating over a hundred spinouts.
This academic strength is increasingly being recognised by global investors. In 2024, nearly one third of deeptech deals involved no UK-based investors – a rise from 29.8 per cent the previous year – highlighting the growing international confidence in the UK’s academic and innovation ecosystems. Clearly, the world is taking notice of the UK’s deeptech scene, and investing accordingly.
What do we need?
There’s no doubt the UK has the foundations in place to be a deeptech leader – but antiquated legal frameworks and funding issues are holding it back from truly capitalising on this potential.
A lack of internal investment, a heavy reliance on global capital, and issues with the allocation of research and development funding are all barriers to progress.
Planning regulation has historically blocked infrastructure needed for the tech of the future, particularly data centres that are crucial for deeptech and any data-intensive technologies. And at London Tech Week 2025, the government announced a plan to invest £1bn into the UK’s digital infrastructure, making good on a promise to consider data centres as critical infrastructure.
Additionally, UK funding has historically been short-term, whereas deeptech is notoriously a long-term endeavour. On average, deeptech takes 20 per cent to 40 per cent longer between each stage of funding than other tech investments. This results in deeptech companies either not receiving funding, or going through multiple rounds to develop a product, multiplying the risk of failure each time.
The government has already begun this process, launching the National Wealth Fund in February 2025 to replace the UK Infrastructure Bank, which will be essential in bankrolling the longer term funding necessary for transformative deeptech development. And news this week of a £750 million investment into the Edinburgh Supercomputer, coupled with the new Regulatory Innovation Office established in October last year, were two further positive steps to offsetting near-term funding shortages.
In its first year, the government has understandably focused on near-term and immediate wins for the British economy. But it’s now time to look further ahead, and policies like those announced this week will go a long way to improving our research and development capacities.
There is still work to be done though.Changes like Capital Gains Tax risk pushing away innovative startups to other markets, and scaring away investment from the UK.
Deeptech has the potential to bring new levels of investment to the UK, as well as securing a scientific and innovative legacy for the country. It’s important not to jeopardise that in the name of immediate, and often short-sighted, wins.
Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates