The prevailing myth is that deep tech startups need loads of capital and require a long time horizon to create value. Yes, there are some deep tech startups that are building new market categories requiring patient long-term capital. But most of the deep tech startups run into capital and time issues because they don’t address product-market risk and technology-market risk well.
Disruptive and proprietary technology is at the heart of a deep tech startup – which means these startups are formed by engineers, scientists and researchers. Often, there are no founders with business background; and even if there are, the center of gravity of the company revolves around the technical founders that the business founders have little to no influence on the decisions and direction of the company.
Early on, market risks are not considered, or quickly dismissed. Focus tends to be on building “a” product without taking the product-market or technology-market risk into account. There is always a “field-of-dreams” explanation – if we build, they will come! Yes, sure! In these cases, the company’s success is somewhat a random outcome, reliant on the business acumen of the technical founders. In some cases, that does happen but in many, the company struggles to find the right market vertical and right product for the market need; despite owning a great technology.
Smart founders understand this and pro-actively bring business founders or senior management into the company. Technical founders provide the business founders / management with authority to challenge them on product and market decisions. Together, they address the product-market and technology-market risks early to avoid costly cycles to find the right product. And these companies succeed without requiring hoards of capital and eons of time.