“This year was widely tipped to be the ‘year of deeptech’. The industry has steadily been building up critical acclaim over recent years, with deeptech dominating McKinsey’s recent top tech trends report, before, in 2021, investors appeared to catch on. With other tech sectors increasingly crowded and competitive, deeptech startups present an attractive proposition to VCs, thanks to their IP strength. In Europe, the result was a record $100B of capital invested and 98 new unicorns, according to Atomico’s State of European Tech 2021 report.
So far, so exciting for deeptech founders. However, generating critical interest and investment opportunities is just part of the battle. If startups want to ride this wave of interest and secure investment in 2022, they have to learn to make it all count.
In my experience, where they often fall down is in the boardroom, convincing VCs why them – why is their startup the one the investor should choose ahead of all others?
I’ve spent much of my career working out how founders can answer this, mapping out what sets deeptech companies apart from regular ones and the impact this has on the relationship between founder and investor – especially in the post-seed, pre-Series A phase of a company’s journey.
What I’ve learned is, while deeptech founders are naturally adept at coming up with answers for the big questions, they’re more likely to be academic and have less commercial experience. On top of this, their product development roadmap can be many times longer and more winding than other tech companies – the combination of which can produce underwhelming pitches that can leave investors cold.
If you’re a deeptech founder, how do you stop VCs from feeling their company isn’t quite ready for investment? You need to wrestle the initiative back in that boardroom with a slick pitch. Using my experience as CEO at Deeptech labs, I’ve rounded up three tips for doing just that.
1. Perfect the process
Your investment approach should mirror a successful sales process, in that it should be smooth, strategic, and well-executed.
There are several ways to finesse your approach, starting with who you pitch to, and when. The ideal investor is someone who knows the industry (check their website and socials), and who has the network to facilitate meetings with the right customers and talent.
It can be tricky to find investors with direct experience in your ’zone of genius’ if you’re building something completely new, but be wary of casting the net wide and bringing in a VC who doesn’t understand the space – their influence will be negative.
Work hard to find investors with similar deeptech plays or business models in their portfolios, and include suitable references to revenue and customer traction – or proxies such as proof of concept projects and letters of intent from credible customers – to help them better understand your development roadmap.
Set up meetings with these VCs in the knowledge that it’s better to pitch to your number one target last. Working your way to the top creates opportunities to tighten your pitch and implement feedback, so your final shot is your best one.
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2. Make sure you’re pitch perfect
With meetings booked, it’s time to sharpen that pitch. Too many capable founders fall flat with presentations that are dry, dull, and, in the case of first rounds, too heavy on detail too soon.
To make sure your pitch is the one they remember, keep it lean by stripping out all unnecessary information, and check it answers these key questions in the right order:
Who are your customers? VCs need to see proof points showing there is a willingness to pay and engage – even if that point for your company is some time away.
What is the problem you’re trying to solve? Hold off on the technology deep dive until you’ve laid out what important problem you’re addressing for real customers.
How big and competitive is the market? Showing what lies ahead and how you’re equipped to beat your rivals is a huge plus.
Finally, the big question: how real is this and how far away from revenue are they? This is the one thing every investor looking at a deeptech opportunity has on their mind
Product demos can be useful to back up what you say—provided it’ll work smoothly and won’t take the investor down a technology warren hole.
3. Start a conversation
Investment is fundamentally about trust and that takes time to build. You can speed up the process by demonstrating you’re open to discussion about your ideas with the potential VC and can take feedback on board-shown by implementing suggestions in the next version of your presentation.
This is still the case even if the investor decides to pull out. A quick no supported by critical feedback is valuable for the next iteration of your idea. Keep the end cordial and you can then ask if they recommend any other VCs you should talk to, and if they can set up an introduction—the worst they can say is no, and frequently the answer is yes.
Pitching can feel like a daunting road to travel. That’s why I wanted to present these steps, taken from the work we do at accelerator VC model Deeptech Labs – a business that provides additional support, access to established funding networks, and insight from successful deeptech entrepreneurs to help catalyse early-stage deeptech success. However you go about it, building partnerships and perfecting your pitch will give you a far better chance of making sure the ‘year of deeptech’ is your year too.