Do U.S. VCs really prefer deep tech over B2B SaaS?
Date
Nov 29, 2025
Classification
- Startups
#
- Investment/Market Trends
Peter Shin / Peter Shin's Startup Thoughts
· English Newsletter for Entrepreneurs Embracing Silicon Valley - https://lnkd.in/gK67Fw_u
· Don't think about making money off trends. - https://lnkd.in/gXhTFE6m
"Do U.S. VCs Only Look at Deep Tech?" Don't Be Fooled by the OpenAI Illusion
🫑 3-Line Summary
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We must face the reality that the recent surge in deep tech investment is merely a statistical illusion created by a few giant firms like OpenAI, and that verifiable SaaS remains the mainstream in the early-stage investment market (Seed to Pre-A).
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Silicon Valley investors do not invest blindly simply because of high 'technical difficulty'; instead, they consider execution and distribution power to be far more important indicators than technology.
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Keep in mind that SaaS products shunned by investors are rejected not because the item is ordinary, but because they failed to prove changes in customer behavior and purchasing processes with concrete data.
🥦 Insight
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Abandon the illusion that 'difficult technology' equals 'profitable business.'
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CEO, are you perhaps deluding yourself by thinking, "Our technology is so complex that no one can copy it"? To be blunt, this is the trap of "technological supremacy" that engineer-turned-founders fall into most often. While having complex technology might earn you an award from the Intellectual Property Office, securing investment from VCs is a completely different matter.
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Do not try to force yourself to claim, "We are an AI company too," just because you saw the deep tech boom launched by giants like OpenAI or Anthropic. Investors are not fools. They are more interested in "how and how quickly you can use this technology to open customers' wallets" than "how difficult the technology is."
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If you are running a B2B SaaS business, focus on a "distribution moat" rather than a "technological moat." Instead of boasting that you "used AI," prove with numbers the tangible ROI and behavioral change, such as demonstrating that "using this tool reduces a customer's overtime by three hours." It is not the seemingly ordinary SaaS that fails, but the SaaS that cannot explain its "money-making structure."
— View original —
Do U.S. VCs really prefer deep tech over B2B SaaS?
· Why It Seems Like More Money Is Flowing into Deep Tech
· Why SaaS is Underestimated
· What SaaS Founders Must Do Even in the Deep Tech Era
There is a common remark Korean founders make when discussing Silicon Valley and the U.S. VC market.
"VCs prefer deep tech over SaaS these days, don't they?"
On the surface, this sounds correct, but from the perspective of a practicing investor, it is only half true. If you observe Silicon Valley investment trends for a long time, the reason deep tech appears hotter is largely due to an illusion created by investors' cognitive biases and market narratives, rather than the technology itself.
With AI, robotics, and biotech recently in the media spotlight, the formula "VC = preference for deep tech" has solidified. Even looking at the 2025 funding graph for AI and deep tech, it appears to show explosive growth, but this does not represent a structural change in the overall market. Companies like OpenAI (accounting for two-thirds), Anthropic, and xAi have distorted the graph by securing investments on the scale of a national economy. While deep tech appears to be leading the overall investment flow in the early-stage sector, SaaS and vertical software still account for the majority in the actual seed and pre-A markets.
The reason for this trend toward SaaS is that deep tech expands the market with big stories, while SaaS can control risk with metrics.
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