Deep tech startups must use these 4 techniques when fundraising
In 2023, global investments are grappling with a substantial 15% downturn, as reported by Crunchbase, creating a challenging backdrop for early-stage startups. The uphill battle is naturally even more severe for deep tech startups developing novel, innovative solutions for upcoming markets.
Logically, their endeavors demand significant investment, and the accompanying risk further complicates the funding equation. According to Dealroom, funding of such companies from Europe saw a notable increase in 2021, likely spurred by a sudden surge in interest in AI. However, they subsequently experienced a significant decline in 2022, and this downward trend continues into 2023.
My international deep tech recently secured a $40 million seed round from various negotiations with venture funds, business angels, and diverse investment entities. Four techniques played a pivotal role in securing this funding for our venture.
Tell a story
One of the essential components in attracting potential investors is a well-known set of documents prepared for presentations. Among them, the pitch deck takes center stage, serving as the primary tool to articulate the essence of your idea and provide a glimpse into market dynamics.
Crafting a concise and compelling pitch deck is a crucial but well-known task, and plenty of sources are ready to inspire. But in many cases, the complexity of your product may be partially conveyed through it alone.
Unless you’re Elon Musk, proving that you alone can create something technically sophisticated can be an uphill battle.
After repeatedly facing the same questions about our product, we introduced an additional narrative format called a “product book.” While a pitch deck is a concise document, a product book dives deeper into the intricacies of your product, offering a more elaborate explanation. The questions you will be asked will likely be different from ours, but the main points of structuring this immersive guide still apply:
- Problem statement: Clearly articulate the problem and why your revolutionary product is needed.
- Possible solution: Draw a picture of how the solution may look without delving into technical details.
- Why now: Explain why it was impossible to reach the same goal before and what has changed to make it happen at this particular moment.
- Competitors: Highlight why existing solutions in the market fall short, emphasizing the unique value proposition of your product.
- Ecosystem: Demonstrate foresight by outlining the ecosystem necessary for your product’s functionality. For example, if envisioning a computer of tomorrow, address the requisite operating system and compatible applications.
- Use cases: Explore the diverse spheres where your product can be applied.
- Visuals: Present each application sequentially and vividly, utilizing all the applications.
- Components: Explain how the solution is feasible by addressing the key components that make it all possible.
