In the dynamic world of technological innovations and scientific research, startups operate in a complex field of tension. The boundaries often become blurred, particularly in the areas of health tech and life sciences, as well as between the concepts of high tech and deep tech. But it is precisely these differences that are crucial for startups - they influence not only product development, but also the strategic direction and the selection of suitable financing models.
The right financing strategy is often the key to success. While high-tech startups can benefit from quick market launches, deep tech startups face the challenge of financing lengthy research and development phases. The question of how to convince investors, make optimal use of public funding programs and find the balance between innovation and market readiness is the focus of this article.
The aim of this article is to shed some light on the subject. We will clarify the differences and similarities between health tech and life sciences, as well as between high tech and deep tech. We will also provide valuable insights into suitable financing strategies for startups in these areas - from funding to approaching investors.
Regardless of whether you want to turn an innovative idea into a marketable product or are already in the process of scaling, this article offers you guidance and concrete tips to successfully overcome the next hurdle.
Health Tech vs. Life Sciences: Differences and Similarities
Health Tech is the use of technology to improve healthcare, prevention and patient experiences. It is an extremely broad field that includes both software and hardware solutions that rely on digital innovation.
Here are some examples that illustrate how diverse this area is:
Software solutions:
Telemedicine platforms: Enable access to medical advice and diagnostics via video.
E-health apps: Help patients record health data (e.g. blood pressure, diet, exercise) and share it with their doctors.
Wearables:
Devices such as smartwatches or fitness trackers that measure and analyze vital data, such as heart rate, sleep patterns or blood sugar.
Platforms and systems:
Tools for digital patient record management.
Interoperable systems that make it easier for hospitals and doctors to exchange data.
The key characteristics of health tech are ease of use, rapid iteration and a strong focus on digital solutions. Startups in this space often benefit from the ability to develop and launch their products relatively quickly – provided they meet regulatory requirements, such as the General Data Protection Regulation (GDPR) or medical certifications such as CE marking.
Life sciences, on the other hand, focus on scientific research and development that expands the understanding of biological systems and aims to solve challenges in medicine, agriculture or the environment.
This area is strongly research driven and includes the following key areas:
Biotechnology:
Development of therapies and vaccines, e.g. mRNA technologies as used in COVID-19 vaccines.
Advances in gene therapy that make it possible to treat hereditary diseases directly.
Pharmaceutical Research:
Discovery and development of new drugs through long-term clinical trials.
Optimization of existing medicines, e.g. through new dosage forms.
Basic biological research:
Investigation of cellular mechanisms, genomics and proteomics.
Research into metabolic processes and causes of disease.
Diagnostics:
Development of new diagnostic tests that can detect diseases earlier, such as liquid biopsies for cancer diagnosis.
Life sciences are characterized by long development cycles, high capital requirements and strictly regulated processes. Startups in this field often need years of research before they can offer a marketable product. However, their innovations are usually more scientifically sound and often disruptive.
The narrow border
Although health tech and life sciences have different focuses, there is a lot of overlap, especially in interdisciplinary fields that combine technology and life sciences.
Examples of this convergence:
Bioinformatics:
Digital diagnostics:
Linking sensor technology (health tech) with life sciences analysis, e.g. blood glucose meters linked to apps or AI-based systems for cancer diagnostics.
Smart Drug Delivery Systems:
Technologies that specifically transport drugs to affected parts of the body (e.g. nanotechnology-based approaches).
Examples of startups that serve both areas
Startups that integrate both health tech and life sciences are creating innovative solutions rooted in both worlds. Here are some notable examples:
Uses AI to identify new drug candidates in pharmaceutical research and optimize clinical trials.
AI application is typical of health tech, while pharmaceutical research is clearly anchored in the life sciences.
Develops therapies for neurodegenerative diseases while using digital platforms to analyze patient data and track the effects of therapies.
An app that uses AI to analyze symptoms and give users well-founded advice on potential diagnoses. The AI component belongs to health tech, while medical validation and research are in the life sciences field.
This thin line between health tech and life sciences presents both challenges and opportunities for startups. While health tech often scores with a quick time to market, innovations from life sciences can have a more profound impact - but they require more time, resources and patience. A clear focus on the specific requirements of your field will help you choose the right strategy for your startup.
High Tech and Deep Tech: The Role in Health Tech and Life Sciences
In the context of startups in the areas of health tech and life sciences, technologies can be roughly divided into two categories: high-tech and deep tech. While high-tech solutions are characterized by their immediate application orientation and rapid market readiness, deep tech stands for scientifically based innovations with high technological demands that often have a disruptive effect. Both approaches have different requirements, potentials and challenges.
Hightech in Startups
High-tech refers to technologies that build on existing scientific knowledge or already established platforms in order to be quickly converted into marketable products. High-tech solutions are usually designed to optimize existing processes or facilitate access to existing services.
Characteristics of high-tech startups:
Focus on application orientation:
The goal is to reach the largest possible user base through intuitive and accessible products.
Shorter development times:
High-tech products require less basic research and can be brought to market quickly using agile development models.
Relatively low development costs:
Since existing technologies are used, investments in R&D are limited.
Examples of high-tech in health tech:
Apps for patient monitoring:
An app that records vital data such as heart rate or sleep patterns and provides analytics for patients and doctors.
Example: MyFitnessPal or Heart Monitor from Apple.
Telemedicine platforms:
Solutions that enable patients to receive medical advice and diagnostics via video calls.
Example: Doctolib or Teladoc Health.
Wearables with health functions:
Devices such as smartwatches that collect health data and provide feedback in real time.
Example: Fitbit or Oura Ring.
Advantages of high-tech:
Market entry: Fast time to market, which is important to get ahead of competitors.
Flexibility: Adaptation and iteration are possible through agile methods.
Accessibility: Products can be easily scaled as they are usually designed for broad user groups.
Challenges for high-tech startups:
Competitive pressure: Since the barriers to entry are low, strong competition arises.
Limited level of innovation: The products are mostly incremental and less disruptive.
Regulatory: Despite the short development time, strict compliance requirements must be met, e.g. regarding data protection or medical device certification.
Deep Tech in Startups
Deep Tech describes innovations based on groundbreaking scientific discoveries or technological advances. They require intensive research and development and often have the potential to permanently change entire industries.
Characteristics of deep tech startups:
Scientific foundation: The products are based on new scientific findings, which are often developed in collaboration with universities or research institutions.
High capital requirements: Long development times and complex infrastructure often make financing a challenge.
Long-term perspective: Market entry will take place later because in-depth testing and validation are necessary.
Examples of Deep Tech in Life Sciences and Health Tech:
AI models for personalized medicine:
Machine learning algorithms that analyze huge amounts of data to develop tailored therapies.
Example: Tempus Labs, which uses genetic and clinical data for personalized cancer treatments.
New biomaterials:
Development of materials that can perform biological functions, e.g. for artificial organs or tissue regeneration.
Example: Modern Meadow, a company that develops animal-free leather and meat.
Quantum technology in diagnostics:
Quantum computers for the analysis of complex biological systems or for accelerated drug development.
Example: Rigetti Computing, which offers quantum solutions to life science problems.
Advantages of Deep Tech:
Disruptive potential: Solutions can transform industries and create new markets.
Scientific relevance: Research often contributes to expanding knowledge in its field.
Competitive advantage: Due to the complexity and know-how, the entry barriers for competitors are high.
Challenges for deep tech startups:
Capital intensive: High costs for research, prototypes and testing.
Long development cycles: It can take years for products to reach market maturity.
Regulatory complexity: Especially in the healthcare sector, comprehensive clinical trials and approvals must be completed.
Key questions: High-tech vs. deep tech
When does high tech become deep tech?
The transition often occurs when the technology addresses a fundamental scientific challenge rather than just optimizing existing solutions. For example, a patient monitoring app is considered high tech, while an AI that diagnoses diseases early falls into the deep tech realm.
What development resources are necessary?
Hightech: Agile development teams, IT experts, focus on UX/UI design.
Deep Tech: Interdisciplinary teams of researchers, engineers and medical professionals, often with access to specialized laboratories and high-performance computers.
The choice between hightech and deep tech depends not only on the vision of your startup, but also on the resources available and your time horizon. Both approaches offer enormous opportunities - provided you understand the requirements and align your strategy accordingly.
High Tech vs. Deep Tech: Funding Strategies
Financing is one of the key challenges for every startup. The approaches for hightech and deep tech startups differ considerably, as their development cycles, capital costs and market requirements are fundamentally different. This section highlights the appropriate strategies and investor expectations for both categories.
High-tech startups
High-tech startups typically have lower capital requirements and can generate initial revenue faster. Their funding strategy focuses on accelerating market entry and building a broad user base.
Funding sources:
(pre-)seed investors and business angels:
Objective: Early support with relatively small investment amounts (e.g. €50,000–500,000).
Business angels often bring not only capital, but also expertise and networks.
Example: Platforms like AngelList or Seedmatch.
Crowdfunding:
Suitable for startups with user-centric products that can generate widespread attention.
Examples: Kickstarter, Indiegogo or specialized platforms for health and technology projects.
Early funding:
Programs such as KMU-Innovativ or ZIM (Central Innovation Program for SMEs) offer grants to finance development projects.
Advantages: Non-repayable and especially suitable for smaller companies with innovative projects.
Disadvantages: Co-financing is an indispensable requirement.
Investors' focus:
Rapid growth: Investors expect products to be marketable within 1-3 years and to scale quickly.
Lower risk: Shorter development times and a clearly defined target group mean the risk is manageable.
Challenges:
Competition for capital: High-tech startups compete with a multitude of players who are also aiming for rapid market success.
Market saturation: Since entry into high-tech is relatively easy, similar products can quickly flood the market.
Deep tech startups
Deep tech startups face very different challenges. Their development cycles are long, capital requirements are high, and technological risks are complex. However, they often offer groundbreaking solutions with high social and economic potential.
Funding sources:
Public funding programs:
Funding opportunities for research and development (R&D): There are a variety of funding programs for startups and young companies that rely heavily on R&D. These are aimed at different phases - from basic academic research to scaling up an innovative product. Below we highlight the most important options, especially for technology-oriented start-ups.
Funding programs before founding: eXIST-WissensTransfer and ERC
If you are still in the academic environment and are working on an idea that has great potential but has not yet been established as a startup, the following programs offer excellent support:
eXIST Technology Transfer:
Goal:
Support for projects that emerge from universities or research institutions and prepare for the later founding of a company.
Specially geared towards technically and scientifically demanding ideas.
Services:
Funding in two phases with up to €750,000:
Phase 1: Covering personnel, material and patent application costs.
Phase 2: Support of the founding and product development until market entry.
Additional advice and qualification measures.
Requirements:
At least one team membership at a university or research institution.
Focus on technical and scientific breakthroughs.
European Research Council (ERC) Grants:
Goal:
Promoting groundbreaking basic research with high potential for scientific and technological innovation.
Particularly suitable for researchers who want to prepare the leap from academic research to application.
Services:
Up to €2.5 million for a term of 5 years (with option to extend).
Focus on excellent research with an interdisciplinary approach.
Requirements:
Applicants must already be academically active and pursue innovative approaches.
No direct company formation required, but possible preparation for technology transfer.
Funding programs after the start-up
After a startup is founded, there are a number of programs that directly support R&D projects. The focus here is on grants that particularly benefit small and medium-sized enterprises (SMEs).
Central Innovation Program for SMEs (ZIM):
Goal:
Supporting innovative projects for SMEs to promote research and development.
Services:
Grants of up to 45% of project costs for individual projects or collaborations.
Funding of R&D projects, market studies and patent applications.
Requirements:
Companies with fewer than 250 employees and an annual turnover of less than €50 million.
The project must be innovative and economically viable.
KMU-Innovativ:
Goal:
Promotion of highly innovative projects in areas such as biotechnology, medical technology and digitalization.
Services:
Project funding with grants of up to 50% of the eligible costs.
Simplified application through a special "fast track" procedure.
Requirements:
SMEs that are active in one of the supported high-tech areas.
Project results must be technologically innovative and economically feasible.
Research allowance (tax incentive):
Goal:
Supporting R&D activities through tax incentives.
Services:
25% tax refund of eligible R&D expenditure, up to a maximum of €1 million per year.
The funding applies to all companies, regardless of size or industry.
Requirements:
Submission of certified evidence that the activity complies with the R&D criteria.
Open to individual companies and cooperations.
funding programs for growth phases
After the first stages of development, startups that are scaling up or planning larger R&D projects require larger financing. Programs such as the EIC Accelerator or industry-specific funding are ideal for this:
EIC Accelerator:
Services:
Grants of up to €2.5 million and optional equity of up to €15 million.
Combination of R&D funding and growth financing.
Target group:
Startups with groundbreaking technologies that have a strong market strategy.
Industry-specific programs:
Examples:
ERA-NET: International cooperation in areas such as biotechnology and health.
Eurostars: funding for SMEs that cooperate with research institutions across borders.
Other essential sources of financing:
Specialized venture capital funds:
Deep tech investors often have a scientific background and bring not only capital but also technical know-how.
Examples: Funds such as DeepTech Ventures or IQ Capital invest specifically in startups with high R&D needs.
Corporate Venture Capital:
Large companies that can benefit from the developments often invest strategically in deep tech startups.
Example: pharmaceutical companies such as Roche or Novartis that invest in biotech startups.
Investors' focus:
Long-term patience: Deep tech investors know that it can often take 5-10 years for a product to reach the market.
Technical understanding: Investors must be able to assess the scientific basis and disruptive potential of the technology.
Challenges:
High initial costs: Laboratories, patents, clinical studies or prototype development are expensive and time-consuming.
Risk of market acceptance: Even if the technology works, the market is often conservative and hesitant to embrace new things.
Different requirements for investors
The unique characteristics of high-tech and deep-tech startups shape not only their business strategies, but also the expectations they have of potential investors – and investors' expectations of them. While high-tech startups often aim for short-term success, deep-tech startups require a long-term vision and a deep understanding of scientific and technological complexity.
High-tech startups: Fast results and market expertise
High-tech startups are characterized by their ability to quickly develop technologies and translate them into marketable products. This agility is reflected in the requirements they place on investors:
Expectations of investors:
Fast results: Investors in the high-tech sector are usually looking for projects with a short development time and manageable risk. The return on investment (ROI) should be achieved within a few years.
Example: A telemedicine startup could appeal to investors by presenting a clear roadmap for market entry within 12-18 months.
Market expertise and network: Investors who have experience with scaling and market entry are particularly valuable for high-tech startups. This support can be crucial for quickly reaching a broad user base or entering international markets.
Less technical focus: Since high-tech products are often based on existing technologies, the focus is less on in-depth technical or scientific analysis and more on market opportunities and business models.
Example of an ideal investor: A business angel with experience in platform business models and access to a strong network in the target industry. For a startup developing a patient monitoring app, such an investor would be ideal, as they can provide not only capital but also market knowledge and strategic advice.
Challenges: The high competitive pressure in high-tech markets requires investors and startups alike to penetrate the market quickly.
Deep Tech Startups: Patience and Technical Understanding
In contrast, deep tech startups, whose innovations are based on scientific breakthroughs or novel technologies, require investors with a long-term perspective and a deep understanding of the underlying technology.
Expectations of investors:
Long-term patience: Since the development time for deep tech startups is often several years, investors must be willing to wait longer for the ROI. The focus is on supporting research and product development until market readiness.
Example: A startup that develops AI-assisted diagnostic methods could only generate revenue after successful clinical trials and regulatory approval.
Technical and scientific expertise: Investors must be able to evaluate the feasibility and potential of the underlying technology. This often requires expertise in biotechnology, AI or materials science.
Willingness to co-invest: Due to the high capital requirements in deep tech development, investors often work together in networks or consortia to secure financing.
Example of an ideal investor: A specialized biotech venture capitalist (VC) experienced in clinical trials, regulatory requirements, and product approval. For a startup developing novel biomaterials, such an investor would not only be a source of capital, but also a strategic partner.
Challenges: The high risk and long development times make deep tech startups less attractive for traditional investors, which is why specialized funds or public funding programs often have to be involved.
Tailor-made partnerships
Choosing the right investor depends heavily on whether your startup falls into the high-tech or deep-tech sector. High-tech startups benefit from investors who provide capital quickly and bring in market knowledge. Deep-tech startups, on the other hand, need partners with technical expertise, patience and the willingness to invest in long-term innovations.
Clearly communicating your needs, goals and development milestones is crucial to building the right partnership and ensuring the success of your startup.
Challenges and opportunities
The path to success for startups in the high-tech and deep-tech sectors is not only characterized by innovation, but also by challenges. At the same time, targeted financing strategies offer opportunities to overcome these hurdles and secure competitive advantages.
Challenges for Startups
The complexity in high-tech and deep-tech is not only reflected in the technology, but also in the requirements imposed by regulators, investors and markets. The biggest challenges include:
Complex regulatory requirements
Health Tech: Products such as telemedicine platforms or health apps must comply with strict data protection laws such as the GDPR. If they are classified as medical devices, additional certifications are required (e.g. MDR in the EU).
Example: A wearable technology that measures vital signs requires a CE marking to be marketed in Europe.
Life Sciences: For deep tech startups in the life sciences sector, clinical trials, approval procedures and patent protection are crucial. These processes are time-consuming and costly.
Example: A biotech startup developing a new drug must go through several phases of clinical trials before it receives approval.
Building trust and credibility with investors
High-tech: Investors expect a clear business plan with a focus on market potential and scalability. Startups must prove their ability to deliver results quickly.
Challenge: Competition is high and similar technologies can easily be copied by competitors.
Deep Tech: This requires more effort to explain the technological potential. Investors without a scientific background may have difficulty understanding the long-term opportunities.
Challenge: ROI is difficult to predict and investors must be convinced that the wait is worth it.
Technological and financial risks
Technological uncertainties: Especially in the deep tech sector, there is no guarantee that research will lead to marketable results.
Capital-intensive development: Startups often have to raise large sums of money for prototypes, tests and clinical trials before they can expect revenue.
Opportunities through targeted financing strategies
Despite the challenges, there are significant opportunities, especially when startups rely on targeted and well-thought-out financing strategies.
Reduction of development risks
Public funding: Programs such as eXIST, ZIM or the EIC Accelerator enable startups to minimize financial risks by offering grants and tax relief.
Example: A life sciences startup can receive grants to conduct preclinical studies before seeking investors.
Networks and partnerships: By cooperating with universities, research institutions or established companies, startups can share resources and reduce development costs.
Acceleration of market entry
Focus on pilot projects: A clearly defined proof of concept (PoC) helps startups build trust with investors and potential customers.
Example: A health tech startup can target a smaller audience to generate initial revenue and validate the product.
Investors with expertise: Choosing investors who bring not only capital but also market and industry knowledge enables startups to overcome obstacles more quickly and better exploit market opportunities.
Scalability and international markets
Startups with well-planned financing strategies can focus on scalability and enter international markets early on.
Example: Through crowdfunding or venture capital, high-tech startups can quickly expand into new markets.
The challenges facing startups in high-tech and deep tech are significant - from regulatory requirements to complex financing and development risks. But with targeted financing strategies and strong partnerships, these hurdles can be overcome. Funding programs and experienced investors not only provide capital, but also help minimize technological uncertainties and accelerate market entry.
If startups use their opportunities effectively, they can not only bring innovative products to market but also take a leading position in their field in the long term.
Closing remarks
The distinction between health tech and life sciences , as well as between high tech and deep tech, is crucial to understanding the dynamics and requirements in these areas. Health tech and high tech often stand for fast, application-oriented solutions with shorter development cycles, while life sciences and deep tech are characterized by scientific depth, longer development times and higher risks. These differences influence not only the type of innovations, but also the approach to product development and financing.
Financing strategies play a central role here. High-tech startups benefit from rapid market entry and investors who focus on growth. Deep tech startups, on the other hand, need long-term investors with scientific understanding and access to funding programs that support the high development requirements. A targeted strategy for capital acquisition and resource management is the key to minimizing risks and making the most of opportunities.
recommendations for action
Clear positioning: Identify early on whether your startup is in the high-tech or deep-tech sector. A precise definition will help you find the right financing strategies and partners.
Use targeted funding programs: Use programs such as eXIST, ZIM or the EIC Accelerator to reduce development risks and accelerate market entry. These resources are often essential, especially in the deep tech sector.
Approach investors with expertise: For high-tech startups, investors with market knowledge and scaling experience are crucial. Deep tech startups, on the other hand, should rely on partners who have scientific understanding and patience.
Transparent communication: Make sure your roadmap is clearly defined and milestones are realistic. Investors and funders need a precise assessment of your technological and economic goals.
Strengthen collaboration: Cooperate with universities, research centers or established companies to gain access to resources, networks and technical know-how.
The successful implementation of high-tech and deep-tech projects begins with the right knowledge and resources. If you need support in developing your financing strategy or selecting suitable funding programs, there are numerous options available to you:
Webinars and workshops: Deepen your knowledge of funding programs, investor communication and market strategies.
Consulting and mentoring: Get advice from experts like Arise Innovations to optimize your financing strategy and maximize opportunities.
Funding programs: Find out about programs like eXIST, ZIM or the EIC Accelerator – they could be the next step for your startup.
Let's overcome the next hurdle together - whether you want to turn your idea into a product or get your startup on the growth path. Now is the right time to shape the future!
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