With more than 40 new LPs from the Benelux region, including The Netherlands Enterprise Agency (RVO), Germany, Switzerland and the United States joining the majority of previous investors that include KPN Ventures, Caterpillar Ventures, and the U.S. State of New Mexico, pre-seed and seed-stage deep tech specialty investment house Cottonwood Technology Fund has closed its third fund.
The oversubscribed round saw over $75 million flow into the coffers, and the firm intends to lend support to startups hailing from the southwest in the States and the northwest of Europe, areas often rife with national laboratories, major research universities, and research centers; and yet often receiving little attention from the venture community.
Now let’s be honest, if the VC game is a long game, the deep tech VC game is a loooooooooong game. Operating in a sector where the payday could conceivably be years and years, if not decades off, putting faith in companies active in photonics, micro-and nanoelectronics, advanced materials, nanotechnology, health sciences, sustainable energy, advanced manufacturing, and robotics can be seen as the stuff of a science fiction novel.
And yet, if and when a deep tech company really truly strikes a chord, it has the potential to change the world. Literally. While they didn’t know it at the time, the team behind this deep tech invention called The Wheel were about to usher in a completely new way of doing things, nor did ninth-century Chinese Taoist alchemists have any idea that their discovery of black powder would eventually lead to putting humankind in space.
In the mind of Cottonwood GP Alain le Loux, there is still a general lack of understanding about the deep tech industry, with investors all too often equating AI and other software companies to real deep tech (or high-tech if you will) ventures.
The latter category requires an entirely different mindset from its investors and the kind of ‘patient capital’ that’s equipped to finance true science-based inventions, which tend to take a lot longer to develop before they can realistically be commercialised – if they ever are.
With these principles in mind, it’s quite the feat for Cottonwood to instill such confidence from investors that if, and when, their ROI ever comes around, not only does it have the potential to be financially beneficial, but also comes with betterment for all mankind.
Provided this deep tech isn’t weaponised, but for now, we’ll leave that out of the equation.
“It’s an honor to have received so much support from such a sophisticated collection of seasoned investors. Many family offices also want to invest directly in our portfolio companies by adding to the next funding rounds as our portfolio companies grow. We have never been in a stronger position to support our portfolio companies from beginning to end,’’ commented Cottonwood Technology Fund III’s managing director David Blivin.