The Search For a Swedish Valley of Death & Possible Ways Out : Investigating Financing Strategies for the Development of Deep Tech Innovation

Abstract: This study seeks to review the topic of how deep tech innovation is raised in Sweden and more particularly, the finance-related constraints of this ecosystem. The study proceeds from the idea of mapping out the available, and subsequently more suitable financing alternatives for novel deep tech ventures. A more specific focus lies within understanding what factors are influencing investment decisions amongst such actors.  Thereon, there is an attempt to ground a theory revolving around what kind of features in the deep tech start-up, are critical in order to overcome the identified financial challenges. Theoretically, it is explained how the inherent uncertainty of new innovative ventures in general, and those of deep tech character in particular, entails additional financing constraints that deter investors. This results in an s.c "Valley of Death", normally transpiring as a firm aspires to transition from a research-driven development business to a market-driven commercial business. The findings in this study can be considered to confirm this phenomenon as transpiring in Sweden, whereupon it is also seen as a reasonable opinion that the respective problem can be maneuvered. The main arguments in terms of success factors in this respect is; (i) the ability to match with investors with a solid understanding of the particular industry of operations, as wells as for deep tech in general, (ii) the ability to acquire a diverse team with solid industry experience and contacts, (iii) the ability to demonstrate market proximity, (iv) the ability to demonstrate a potential that can justify the intensified uncertainty, as well as a credible plan to reach it, (v) and abilities to argue positively for impacts in sustainable aspects. Furthermore, a few suggestions for further research in relation to the topic and problematization have been identified; alternative choices for fiscal policies, deep tech opportunities in the shadow of s.c impact investing, eventual opportunities in addressing public markets, and eventual constraints in the external dichotomy between public and private sector financing.