Deep Tech's "Dark Matter" Problem: Why We're Losing Billions in Innovation (And How to Fix It)
Software has dominated the startup world for decades, but the biggest challenges of our time — pandemics, climate change, food security — can't be solved with code alone. They require deep tech innovation in biology, chemistry, and physics.
Unfortunately, deep tech innovation is rarely messy. Every team has its own R&D methods and knowledge management systems. Tacit knowledge and know-how remain locked in the heads of key scientists or scattered across a hodgepodge of notebooks and digital archives. This is the ‘dark matter’ of every startup.
And because this 'dark matter' is unstructured and non-standard, it is lost at key transitions, especially when a company shuts down.
The 'real’ dark matter. Dark matter filaments (shown in red) bridge the space between galaxies (shown in white) on this false color map. Credit: University of Waterloo.
We summarize here the major takeaways from part 1 of a three-part series on our Substack, Building for 2075, inspired by our whitepaper Dark Matter: Harnessing the lost innovation of deep tech wind-downs. In the full post, we examine what dark matter is, how it is being lost, why a company shutdown is so detrimental to dark matter losses, and what can be done to rescue this IP from disappearing.
Major takeaways:
1. Dark matter is the lifeblood of deep tech — and it's hiding in plain sight.
Intangible assets now account for up to 90% of the value of the S&P 500. In deep tech specifically, intellectual property is where almost all enterprise value lives. But there's a catch: most of that IP is informal — trade secrets, raw data, operating processes, failed experiments, and tacit know-how locked inside scientists' heads. Fewer than one-third of deep tech startups have even filed a patent by the seed stage, despite evidence that formal IP can increase the odds of securing financing tenfold and lead to 5x higher exit rates.
2. Dark matter leaks out at every major transition.
When key employees leave, 35–70% of organizational knowledge walks out the door with them. M&A deals fail or underperform 70–90% of the time, partly because tacit knowledge evaporates. Universities hold more than 50,000 unlicensed inventions. And the worst offender? Startup shutdowns. If 90% of startups truly fail, then up to 90% of our innovation investment is at risk of vanishing — taking years of R&D lessons with it.
3. More than 60% of dark matter disappears when a startup shuts down.
During wind-downs, creditors prioritize fast asset sales, which usually means patents only. Research shows 87% of shutdowns result in significant or complete loss of informal IP, and in 30–40% of deep tech closures, even the formal IP is lost. As one founder put it bluntly: "The IP is sitting in my closet, unmonetized." This is a classic collective action problem and a massive missed opportunity for science and society.
The good news? History shows that when dark matter is preserved, it can change the world. The story of rapamycin — a billion-dollar drug rescued from a freezer next to tubs of ice cream labeled "DON'T EAT!!" — is proof that one person's conviction to save informal IP can lead to lifesaving breakthroughs decades later.
So how do we stop losing more than half of our innovation investment, and what would it take to systematically harness dark matter to accelerate discovery? Read the full post here →
Or if you want to dive into the full whitepaper, you can download it here.