What’s hard tech (and why are we so passionate about it?)
Technology is evolving faster than ever and hard tech stands at the forefront of this innovation, offering exciting and real solutions to some of the world's most pressing challenges from carbon removal to regenerative agriculture. As a pioneer in hard tech investing, we believe the obstacles our planet faces cannot be solved by software alone. We need cutting edge physical solutions that drive impact—hard tech solutions that can reshape industries and improve lives.
Defining hard tech
If you search for a definition of hard tech, you’ll find it can be fluid. At Pangaea Ventures, we define it as comprising technologies primarily in advanced materials, engineering, chemistry, and biology. This finds us investing in fields such as advanced manufacturing, clean energy solutions, and biomanufacturing. Hard tech innovations can be capital-intensive, requiring substantial investments to develop, commercialize, and scale. Some of hard tech’s key characteristics may include:
Physical Product Development: Hard tech focuses on creating tangible products that require sophisticated engineering and manufacturing.
Capital-Intensive: The development process often demands considerable upfront investment, which can pose a barrier to entry for startups.
However, not all ventures in this space follow the same path. Some innovative companies, like many in our portfolio, focus on capital-light technologies and business models, allowing them to scale efficiently without the need for hundreds of millions of dollars in funding.
Longer Time to Market: Due to the complexity of product development,supply chains and regulations, hard tech solutions generally have longer research and development cycles before they reach market readiness.
Impact-Driven: Many hard tech innovations are aimed at solving pressing global challenges, such as climate change, infrastructure needs and resource scarcity, making them attractive for impact investors.
The opportunity of hard tech
Hard tech’s opportunity goes beyond mere numbers; it's about a vision for how these technologies can make a material impact. Those investors who embrace it can play a crucial role in shaping the future.
Tangible impact: Hard tech offers huge potential for solutions to clean energy, food security, and healthcare challenges. For example, Pangaea portfolio company Vestaron is transforming crop protection with peptide-based insecticides from spider and other venomous animal venoms that offer effective pest control while being safe and sustainable. Innovations like these are essential for ensuring planetary health.
Long-Term Viability: While the path to profitability may be longer in hard tech due to high initial costs and complex R&D cycle the potential returns—both financial and societal—are meaningful.
Hard tech renaissance: The idea of a hard tech renaissance is gaining momentum, with accelerators like Y Combinator and Plug and Play spotlighting opportunities in hard tech and climate tech and VC’s like Pangaea exploring its potential for impact in clean energy through companies like ESS, a provider of long-duration (4+ hours) energy storage solutions and Versogen, which leverages breakthrough electrolyzer technology to produce green hydrogen at scale.
For Pangaea and its LP’s, investing in hard tech isn't only about financial returns; it's about making a lasting impact on our world. As we navigate this complex landscape, we remain committed to supporting innovations that can drive real change for future generations
Next in this two-part blog series, ‘How does hard tech differ from deep tech’.
