Why your deep tech start-up might not get funded (even if your product is great)
When talking about start-ups, we automatically think of tech start-ups. Even in the least technical industries, new solutions require some sort of technological innovation to be competitive – whether it’s a simple app or a complex system…
When talking about start-ups, we automatically think of tech start-ups. Even in the least technical industries, new solutions require some sort of technological innovation to be competitive – whether it’s a simple app or a complex system composed of multiple software and hardware components.
Today, we’re talking about deep tech start-ups. I especially want to address their technical founders. I’m also a tech guy at heart, this is what I did for the first 10 years of my career. In the past few years, though, working as a Tech Venture Partner for a VC fund (Fortech Investments) and looking at hundreds of pitch decks, I can say that I understand both sides of the table. This is why I want to share a few pitfalls that make fundraising harder, if not impossible, for deep tech start-ups, even though their product is great.
In the business of start-ups, especially VC-backed ones, you need to understand that what appeals to your scientific and technical peers might not resonate in the same way with investors. And this disconnect can be the stumbling block between your innovative idea and a successfully funded venture.
Decoding the tech jargon
One of the most common deal breakers I see is in the content of the pitch deck itself. Highly technical founders, often deeply engrossed in the technical aspects of their products, often forget to translate the technical side to investors. And I don’t mean for them to explain what their product does. I want them to explain how their technical excellence translates into demonstrating market potential, scalability and how that product addresses a specific need in a way that’s both understandable and compelling.
For example, a solution might be presented in the language of the target customers (as in a sales deck). Still, investors love to see how it is positioned relative to the target market and better understand the use cases to see how important the problem is (typically already known by customers). Even if there is somebody highly technical doing the investment analysis who gets all of it, they still must convey the message to the non-technical investment team members and some of the important aspects can get washed out.
Hundreds of decks from a multitude of industries enter a VC’s funnel every year. The selection process in the initial phases of filtering is quick so those that require too much initial effort just to be understood, can be easily left out.
You must control the narrative, by making your presentation clear even for people outside your industry that have never implemented a similar solution. Focus on the why and what, rather than the how.
