Building a Ladder to Commercial Success for Deep Tech Founders

Visit most accelerator programs or pitch competitions and you’ll hear founders being told that “if you build it, they will come” is false. Don’t wait until your product is built to get it in front of customers. Build and ship an MVP as fast as possible to get feedback and unlock early revenue.

This is great advice… if you’re building a software company. 

For deep tech companies, it’s more complicated. 

Where a minimum viable software product can be put in front of a paying customer quickly and cheaply, deep tech go-to-market can require a number of significant steps. All too often, founders try to do these at no charge to the customer, delaying commercial outcomes. 

In deep tech, a different approach is required to close the dangerous air gap between recognising that an invention is theoretically valuable, and unlocking actual commercial value.  

To help deep tech founders build investor confidence and strong customer relationships to underpin your go-to-market strategy, we’ve created a framework and tool - the deep tech customer ladder. 

But first, why is go-to-market in deep tech actually harder?

Deep Tech Go-to-Market is Hard

Here are some of the important extra requirements we must consider in deep tech.

  • There is a non-trivial transition of atoms from lab to scale. To scale products that involve atoms, not just bits, we often need to work with complex machines and manufacturing processes. We may also need to use elements of nature like particles or light, proteins or cells; yet nature is fickle and resists being tamed. 
  • There is probably a need to be regulated and pass complex safety tests. We cannot ‘move fast and break things’ when dealing with things humans will eat and depend on. We need to do the work, and other people need to check that we have done it.
  • There is likely a scientific claim that the market won’t believe at first. When we claim that we can grow a crop with a 20% yield uplift or that we can build a quantum computer that can calculate something that would otherwise take billions of years, people don’t believe us until multiple, trusted sources validate our claims. 
  • There will be longer cycles for each iteration. We’re getting better at speeding up our learning loops, but product innovation is often fundamentally constrained by harvest cycles or procurement windows in global organisations. It requires more time.
  • It doesn’t matter how cool the science is if it costs too much to deliver at scale. Techno-economics often get in the way of an invention becoming a solution in the market. No one is going to buy a $120 litre of milk.
  • Deep product integration can mean we rely on other people’s timelines. An ingredient in food can’t stand alone. A new form of manufacturing is no use unless the industry knows how to integrate it. These partnerships can require months or years of collaborative development.  
  • The whole supply chain will be scrutinised. Any new product that will operate at scale will be scrutinised for its climate impact. Deep tech supply chains are complex, and it will take time to measure and optimise carbon/sustainability performance along them.

Given these challenges, and the strong customer empathy that many deep tech founders possess, it’s tempting to resolve as many of these as possible before asking customers to make any commitments.  

In fact, customers will default to this- while there is uncertainty as value is developing, it is easier to ‘wait and see’. 

Model 1: Leaving customer-value on the table 

But delaying commercial activity is a mistake! 

It increases the risk of heavy burn on precious funds, makes it harder to raise capital, and limits the learnings that come from an integrated message of value delivery to - and commitment from - customers.

What is another way of engaging with customers? How might we partner with our customers to build a body of evidence for the future we imagine?

Introducing: The Deep Tech Customer Ladder

The ladder is a framework for how deep tech companies can work with customers to capture and deliver value while they are still building their product. 

Model 2: Successively engaging customers as you de-risk your business 

While the rungs on the ladder will be different across companies and industries (see examples in the slides below), the objective is the same: break down the customer’s ‘climb’ into a series of steps, where each time you remove risk, the customer rewards you with an increased commitment. 

A customer paying money for a functional product is the most obvious step, or transaction, on the ladder. But on the way up, there are several other elements of a matched value exchange between company and customer to consider. 

For example, as a startup, you might give:

  • Product: what is the form and maturity of the product we will provide?
  • Integration Services: how will we integrate our product with theirs?
  • Exclusivity: do we offer any time/SKU/geographical exclusivity?
  • Media: will both sides promote this partnership for the benefit of the customer?
  • IP: will the customer develop or own any unique IP as a result of this step?

In exchange, the customer might provide:

  • Time: how much time do we expect this step to take?
  • People/Resources: will we need access to special people and/or infrastructure?
  • Money: how much money will it cost the customer?
  • Reputation: will this partnership require a reputational commitment from the customer?
  • IP: do we need customer IP to proceed?

Each transaction needs to be captured in an agreement that describes what each party is giving and getting, and documents how achieving the outcome of this step will move closer to achieving the big vision (and unlocking the big revenue). Examples include pilot and trial contracts, conditional purchase orders, joint development agreements, letters of intent (LOIs), etc. 

In addition to capturing mutual commitments, these agreements are key in building investor confidence. 

Introducing: The Deep Tech Customer Ladder

Deep tech founders must follow a different path when inventing and commercialising a world-changing technology, but early and frequent engagement with customers is no less important than for software companies. 

We hope that the Deep Tech Customer Ladder provides a practical tool to help founders develop strong customer relationships and demonstrate commercial potential to investors. 

Check it out below, including several examples, and let us know what you think! 

This post was co-authored by Phil Morle (Main Sequence) and Sarah Nolet (Tenacious Ventures). To catch Phil building out loud, follow him on twitter or subscribe to the Main Sequence newsletter. For more bi-weekly insights on innovation in agri-food from Sarah and the Tenacious Ventures team, subscribe to the newsletter here.

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Key takeaways

  • "If you build it, they will come” is false, even in deep tech
  • Deep tech commercialization is hard for several reasons
  • Early and frequent engagement with customers is key - the ladder is a framework & tool

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