Acquisition International - Global Excellence 2021 63 Acquisition International - Issue 9 15 Jul21821 Company: ADGS Computer Systems Contact: Christophe Billiottet Email: christophe. [email protected] Website: www.adgs.com Deep Technology in the Middle East ven though “deep tech” is a relatively new term, we have been familiar with the phenomena of start-ups that have changed our lives since the 60s. Whether it is the pioneering work done by IBM or Intel on computer chips, Apple and Microsoft’s role in the development of personal computers and smartphones, BioNTech and Moderna for mRNA vaccines, or Space X preparing space travelling, these companies and others have changed the world in a short time. The word doesn’t refer to innovation itself, but to a category of start-up companies that develop new products based “on scientific discovery or meaningful engineering innovation”. This encompasses areas of fundamental sciences like chemistry and quantum computing, but also robotics and biotechnologies as well as frontier industries like artificial intelligence or agent based modelling. Unfortunately, what Arab countries do not realise is that they are currently building the Middle East economic future on a foundation of sand; most of the current focus in those countries is on digital technologies like e-commerce, social platforms or service helpers’ apps like e-Gov. Most attention and start-up investment is not going into deep technology, but to digital technology. Many of these companies that investors are still founding are taking resources away from the bigger solutions that the Middle East so desperately need. Digital technologies have done a great job at transitioning us from a physical pen and paper world to one that’s faster and more collaborative. But we now must realise that we’re on the tail-end of this latest wave of innovation, one which was powered by social mobile and cloud. We have to move from easy-to-understand business models to futuristic projects which push the boundaries of what is possible. On another side, deep technology has the potential to advance technological frontiers. It is built around scientific or engineering advances and it is the next crucial wave of innovation. It is a critical factor in geostrategic change, and the so-called “fourth industrial revolution” is re-shaping the contours of the emerging global order. For instance, artificial intelligence fundamentally disrupts the human ecosystem and may occasionally reverse the balance of power. There is a real understanding that the future belongs to the countries that heavily invest in deep technologies; the most important are the USA, Canada, China, South Korea, European countries and Israel. Governments need to find ways of identifying and acquiring the most important research before strategic competitors do, because science, technology, and more generally innovation are instruments of power. Particularly, artificial intelligence is driving massive shifts across nations, as it redefines relationships between nations, between man and machine, and between humanity and the universe. E It was in the scientific magazines from the 1960s that images of the future, cities filled with flying cars, vacuum tube trains, wireless video telephones, or cities built on planet Mars under a glass dome were showing an ambition and an optimism about improving our world in real tangible ways. “Deep technology” is the name that has been given to the companies whose R&D strives towards these futuristic dreams. Sadly, Arab countries do not attract deep technology companies, mostly because they do not have a support policy for this kind of company. Meanwhile, the gap between technology-rich nations and resource-rich nations is widening. Instead of attracting and investing into their own tech companies, gulf countries spend billions buying foreign technologies, which makes them poorer and completely dependent, or “controlled”, by the technology-rich countries. The challenges that deep technology companies face are new. Deep technology companies are usually built around a novel technology that offers significant advances over existing solutions in the market; often they create new markets that don’t yet exist. Taking these technologies from “lab to market” requires substantial capital carrying a much higher degree of risk than an average venture investment. The majority of investors are often surprised by the amount of complexity involved in building a successful deep tech company. An obvious, but fundamental difference with deep technology companies is their technology-first approach. Typically, the founder has developed a novel technology or IP as part of their PhD thesis or postdoc work and is in search for a real-world problem it can solve. Most start-ups, in general, pick an existing problem in a market they know well and develop a product that solves that problem and they have a clear sense of the problem they need to solve. Deep tech entrepreneurs take the opposite approach and as a result, they often suffer from SISP (a solution in search of a problem), as investors call it. Since most deep technology companies are built around a fundamentally new and unproven technology, they carry higher risk than digital start-ups. Typically, the tech has been tested in a lab or a research centre and the early results are therefore often derived in a controlled environment. As a result, while building a product, founders are likely to encounter technical challenges along the way and won’t be able to eliminate the technology risk until later in the process. Deep technology companies have the capability to create new markets with little competition and can replace existing technologies while fundamentally transforming an industry. When successful, deep technology companies deliver outsized returns over an average venture investment. Thus, the deep tech companies from the Middle East are mostly located in Israel with 195 of them, while countries like UAE have three, and Qatar one only. Now let’s imagine the economy of the gulf region driven by artificial intelligence and agent based modelling…
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