Deep tech startups derive their identity and competitive advantage from the unique technology IP they develop. The products the company builds to solve market problems have this technology IP at its core. But how do we know the startup’s technology is the right one for the market problem they are solving. Would their technology of choice satisfy the performance and cost requirements of the market? I call this matching of technology to the market need, technology – market fit. And in early stages of a deep tech startup, understanding technology-market fit is vital to the company’s survival and success.
Technology-market fit is a unique factor in deep tech startups. Yes, every startup – may it be fintech, consumer or SaaS – makes technology choices and builds unique sections of code or hardware to arrive at the final product. But the technology choice is neither proprietary nor irreversible; and it certainly isn’t the primary value driver of the company. In deep tech companies, their unique technology is the lifeblood – and get the technology-market fit wrong, the company ceases to exist.
Take the example of adoption of fingerprint sensors in smartphones. Optics has long been the technology of choice for fingerprint sensors at border control and other security checkpoints. But optics technology is bulky to put in smartphones; variety of technology alternatives vied for the market. But the only technology that fit the size, performance and cost requirements was RF / Capacitance based sensors. Startups that built the sensors using RF / Capacitance had technology-market fit; and the rest either shut down or pivoted to use the same technology.