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Tough Tech Landscape

Discover the investors, companies, and trends behind record-breaking venture investment in Tough Tech.

01 Introduction

The rise of Tough Tech

Across the globe, teams of scientists, engineers, and entrepreneurs are developing technologies to mitigate climate change, enrich human health, and create the next generation of bedrock systems and infrastructure. Just a decade ago, however, such teams struggled to find venture investors willing to support the necessary technology development before their solutions reached commercial viability. But something’s changed. As we showcase in this report, venture investment in Tough Tech has never been stronger — and that’s good news for everybody.

Total VC invested in Tough Tech from January 2016 through August 2021
Total VC investment in Tough Tech from January 2021 through August 2021
Year-over-year increase in Tough Tech VC investing from 2019 to 2020
Median late-stage pre-money valuation in Tough Tech hits a new high

02 Investment Areas

The time for Tough Tech is now.

Venture investment in Tough Tech is on track to have its biggest year ever, with $77.5 billion in venture capital invested in the first 8 months of the year, on track to hit $116.3 billion across 5,800 deals by year-end.

Breakthrough technical advances, growing adoption, expansion of business applications, and macroeconomic factors, such as government policies and shifting regulations, have all contributed to 2021’s record-setting venture investment environment.

Climate Change

From January 2020 through August 2021, more than $40B in venture capital has flowed into climate tech startups. This is a remarkable 37% increase compared to all investments made in 2018 and 2019.

  • $22.3B VC invested in Climate Change companies (01/2021–08/2021)
  • 957 VC transactions completed in Climate Change (01/2021–08/2021)
A chart showing the global VC deal activity in climate change
Global VC Deal Activity in Climate Change ($B) through 08/2021

Human Health

A diverse sector filled with technologies addressing therapeutics, nutrition, pandemic response, and more, human health innovations are only expected to increase in number and value. Especially considering the continued pace of discovery in the biomedical sciences combined with the convergence of biological sciences and domains like engineering, machine learning, and big data.

  • $41.7B VC invested in Human Health companies (01/2021–08/2021)
  • 2,057 VC transactions completed in Human Health (01/2021–08/2021)
A chart showing the global VC deal activity in human health
Global VC Deal Activity in Human Health ($B) through 08/2021

Advanced Systems & Infrastructure

2020 proved that communications technologies and computing systems are critical infrastructure. It is perhaps no surprise that 2021 has seen a rapid increase in advanced systems & infrastructure VC deal activity. $20B was invested in the first eight months of 2021 alone, 45% more than at the same point in 2020.

  • $20B VC invested in Advanced Systems & Infrastructure companies (01/2021–08/2021)
  • 1,200 VC transactions completed in Advanced Systems & Infrastructure (01/2021–08/2021)
A chart showing the global VC deal activity in advanced systems and infrastructure
Global VC Deal Activity in Advanced Systems & Infrastructure ($B) through 08/2021

03 Segments


  • 3D printing

    As of August 2021, the 3D-printing segment was approaching $1B in annual VC funding. With three months left in the year, new highs in both deal value and volume could be attained. Standout companies that recently raised include Formlabs, which closed upon $150M in funding in May 2021, and NewMed Medical, which raked in $100M in March 2021.

    $4.3B venture capital invested 01/2016-08/2021

  • Built environment

    Built environment has completed 158 VC rounds since 2019, with 2021 already seeing well over $300M invested. Companies are benefiting from upstream technical advances in materials and 3D printing, which enable more efficient mass production.

    $0.9B venture capital invested 01/2016-08/2021

  • Mobility

    Of the vast sums of capital flowing into mobility — $13B across 206 transactions completed in 2021 through August 31 — the bulk has been concentrated in the automotive space, primarily development of autonomous and electric vehicles. Although air transport has attracted less capital, there has been an uptick in the past two years in aggregate VC invested in the space, at well over $1B per year in 2020 and 2021 to date.

    $52.7B venture capital invested 01/2016-08/2021

  • Advanced & quantum computing

    Advanced and quantum computing has enjoyed an uptick in investor interest, with close to $730M invested across 81 financings since 1/1/2021. Commercial applications of quantum computing remain concentrated in data processing, but new developments continue to draw investor interest.

    $1.2B venture capital invested 01/2016-08/2021

  • Cleantech

    Cleantech venture funding has skyrocketed in 2021 to date, leaping to $4.5B to eclipse all prior annual tallies. At 300+ deals, it is also on pace to set a record in deal count as well. Since January 2020, more than 20 cleantech companies, including QuantumScape and Li-Cycle, have gone public via reverse mergers with SPACs.

    $13.5B venture capital invested 01/2016-08/2021

  • Nanotechnology

    With $1.9B invested in the past 20 months, nanotechnology companies are experiencing unprecedented investor interest. Some of the larger transactions explain the surge in funding, with companies such as handheld ultrasound platform Exo and orphan drug developer Glycomine exemplifying the diverse ways that nanotechnology can be deployed.

    $4.3B venture capital invested 01/2016-08/2021

  • Advanced manufacturing

    Advanced manufacturing has notched its most lucrative year yet, with nearly $3B in aggregate VC dollars invested in 2021 through August 31. Key areas of innovation include increasing application of novel materials to improve capabilities while reducing costs and emissions; expanding 3D-printing capabilities, including simulation with advanced software systems; and further investment into biofabrication.

    $12.5B venture capital invested 01/2016-08/2021

  • Life sciences

    The largest Tough Tech segment, life sciences, has seen a profusion of VC invested in 2020 and 2021 to date, with close to $40B invested last year and nearly $35B already invested this year. Key areas of development include production process acceleration for well-known treatments such as vaccines — for example, the lauded mRNA-based vaccine process — and nanoparticle-based therapies for neurological conditions.

    $144.6B venture capital invested 01/2016-08/2021

  • Robotics & drones

    Within the robotics & drones space, $4.3B has already been invested in 2021 across close to 400 completed financings. These figures compare favorably with the $3.2B invested in 2020 across 473 completed rounds worldwide. A handful of large exits have boosted 2021 tallies to an all-time exit value high of $2.3B.

    $16.1B venture capital invested 01/2016-08/2021

  • Agtech & foodtech

    The agtech & foodtech segment has experienced a record surge of venture funding between January 2020 and August 2021, with $10.7B invested across nearly 800 completed VC financings. Foodtech continues to be concentrated in novel proteins and ingredients manufacturing, though some companies are developing innovative equipment and dedicated software plays.

    $17.0B venture capital invested 01/2016-08/2021

  • Materials

    At $448.2M of VC already invested in 2021 so far, the materials sector is on track to see a record high in both deal count and total invested capital. Increasing emphasis on sustainability and creating a circular economy is boosting R&D across many materials, ranging from carbon-free cement and steel and wood-derived construction materials to textiles and recyclable and biodegradable plastics.

    $1.7B venture capital invested 01/2016-08/2021

  • Semiconductors

    Semiconductors rose to the forefront of Tough Tech dialogues in 2020 as multiple industries suffered from pandemic-related contractions in chip manufacturing and governments renewed efforts to foster domestic semiconductor production. Application-specific semiconductors have drawn the bulk of VC invested — especially in 2021 to date — as multiple industries demand ever-increasing computational power and customization.

    $16.9B venture capital invested 01/2016-08/2021

  • AI & ML

    $8.6B in VC has been invested in the AI & ML space since the start of 2019, including $4.5B invested in 2021 through August 31. Both startups and large, established players are pursuing key technical advances in and deployments of AI & ML, including increasing usage of AI in chip design; tinyML and additional modeling; and self-programming capabilities.

    $10.4B venture capital invested 01/2016-08/2021

  • Medtech

    After nearly linear growth in venture funding throughout the 2010s, medtech is poised to see a record tally of VC invested in 2021, at well over $6B already invested across close to 600 transactions. Investors have demonstrated interest in companies that develop nonpharmacological treatments such as surgical robots and improved diagnostic tools — particularly those that can empower preventive care.

    $27.3B venture capital invested 01/2016-08/2021

  • Spacetech

    Spacetech funding has skyrocketed in the past five years, cresting at 129 completed financings in 2021 to date for a total of $2.3B, which compares favorably to 2020’s 129 completed rounds at $2.7B. The next generation of spacetech companies are addressing challenges with in-space manufacturing, satellite propulsion, space debris cleanup, earth observation, and global internet connectivity.

    $9.1B venture capital invested 01/2016-08/2021

04 Q&A


  • The Engine is an early-stage venture firm that invests in Tough Tech companies commercializing transformative technology that will lead to a healthier population, more accessible and adaptive society, and a more resilient world.

    It was conceived of and created by MIT to address the need for sustained support for startups commercializing breakthrough science and engineering, with the potential to solve intransigent global problems and make a material, positive impact on society. Launched out of MIT in 2016, The Engine was designed as an “innovation orchard,” where Tough Tech founders could have access to capital, infrastructure, and a growing network of stakeholders needed for them to be successful. Together, these three elements combine to create a model around which we can build an innovation ecosystem that successfully translates breakthrough research to impact.

  • Tough Tech is transformative technology that solves the world’s most difficult challenges through the convergence of breakthrough science, engineering, and leadership. While it is often grouped with Deep Tech or Frontier Tech, Tough Tech differentiates itself by always centering on mission and purpose.

    Tough Tech has the potential for big returns and global impact, through the creation of new foundational economic infrastructure and by enabling the transformation of existing industrial activities. The Engine’s Tough Tech founders have proven breakthrough science in labs and are taking the next step to bring their technologies to market and impact. These companies will improve human health and agriculture, build resilient systems, enable adaptive infrastructure, and adapt to — and even reverse — climate change.

  • Our commitment to early-stage investment in Tough Tech companies has remained unchanged. Previously, skeptics of investment in Tough Tech would point to long technology development timelines and capital intensity as barriers to successful returns. However, the pandemic, coupled with the scientific and technological world’s response, has highlighted the importance of supporting Tough Tech across not just health, but also other urgent societal challenges, such as climate change. The Engine continues to identify, fund, and offer the infrastructure needed to startups pursuing transformational changes.

    Although our investments are broadly defined as Tough Tech, each industry in which Tough Tech can play a role has unique trends and economics that factor into the investment thesis in that space. We invest across three segments: Climate Change, Human Health, and Advanced Systems & Infrastructure.

    However, a few key underlying themes exist that carry across every industry. First and foremost is finding incredible founders to build diverse and people-oriented companies — great technical founders who can traverse the difficult journey of Tough Tech and attract great people — is key to long-term success. Other essential factors are technologies that can potentially impact society on a global scale and transform industry. To take big swings and conquer Tough Tech, we dream big and understand the hurdles impeding progress in each industry.

  • The Engine’s approach focuses on shepherding work from the lab and academia to commercial reality. Discovery is just the start. Bringing new science and technology to market requires a unique skillset and an entrepreneurial drive. We’ve designed programming, such as our Blueprint Program, to foster these skills and promote the next generation of Tough Tech entrepreneurs.

    While commercializing Tough Tech, a founder has to manage risk across four dimensions: technical, market, scale, and regulatory. Assessing those risks requires expertise in the specific technical fields, an understanding of intricate market structures, and engagement with the policy community — a combination of knowledge that is difficult to assemble in the time period normally allotted for company diligence. At The Engine, we have worked to build a network of technologists, investors, government representatives, corporates, and academics that provides important feedback during our diligence process, and we work closely with our portfolio companies as they move forward.

  • Diversity has been central to The Engine’s values from the beginning, and we are particularly proud of the makeup of our founders to date. In the past 18 months, we have seen the conversation around venture diversity change. This open dialogue means looking more closely at the representation of our portfolio, as well as our firm, and identifying how we can continue to do better. Today, 66.6% of companies have a minority CEO and/or founder (defined as Asian/Asian American, Black/African American, Latinx, American Indian, Native Pacific Islander, and/or women); 44% of our companies have a female founder; and 66.6% have a female executive or board member. While we are incredibly proud of our progress thus far, we all have more work to do.

  • Like the rest of the venture capital industry, the last year has been an exciting time at The Engine. We announced the close of our second fund in fall 2020, and have invested in 9 new companies—spanning dynamic and accessible routing for public transit (The Routing Company), to distributed chemical production (Emvolon), to cement decarbonization (Sublime Systems). Since its inception, The Engine has invested in 36 companies across both of our funds.

  • We look for founders with the drive and passion to fulfill their mission. They must be working on groundbreaking science or technology that has the potential to solve a big global problem and the opportunity to transform an industry.

05 The Full Report

Read the complete report.