Deep Shadows was founded by the authors of Vital Engine: Sergey Zabaryansky and Roman Lut. They began to work together as a team in 1998. Roman came to the game industry from demo making. By the time of their meeting, two of his demos were prizewinners on a well-known Russian demo-party, "Enlight".

Meanwhile Sergey worked in two United States software companies. In 1999 they both started to work at GSC Game World on Codename Outbreak (Venom). Sergey was the producer and lead programmer of this game, while Roman was a programmer and level designer. Having successfully finished this project for GSC, the two left the company and founded Deep Shadows. Their first project was to be Xenus, an action/RPG FPS based on the Vital Engine 2.