Deep tech ventures are usually built around a novel technology that either solves a fundamental market demand or offers significant advances over existing solutions. More frequently than their digital counterparts, they create new opportunities and markets that did not exist previously.
Taking these technologies from the “lab floor to business” requires substantial human capital and investment, carrying a different degree of risk than the average venture investment, which leads less sophisticated investors to become hesitant and shy away from tremendous opportunities.
In this context, universities play an important role in de-risking, funding and helping the early commercialisation of deep tech companies. Singapore is extremely lucky to see the leadership and strong support of the National Research Foundation (NRF), the research institute A*STAR and the top local universities, notably NUS and NTU, when it comes to local deep tech entrepreneurial endeavours.
Obviously, this support does not prevent local teams of science entrepreneurs from facing regular venture-building complexities, and the usual ‘valley of death’ in the later transfer stages. But it constitutes a welcome differentiator against international competitors and shows how Singapore plants the seeds for tomorrow’s high-tech champions.
While deep tech startups can come out of any university, not all universities have real commercialisation experience and a supportive frontier tech ecosystem. Looking at their very own ecosystems with pragmatism, science entrepreneurs should leverage every advantage that the university environment can provide, such as incubation space and top-notch facilities, and connections to scientific experts who can be leveraged as consultants and advisors.
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Voicing out what should be adapted, or improved, within universities to make the life of science entrepreneurs easier is essential. It goes from sharing best-in-class technology maturation principles from other research ecosystems to challenging conservative intellectual property frameworks, or asking for more contractual creativity and speed.
Find your corporate pathfinders
When it comes to financing deep tech startups, available university grants can help catalyse and do a certain amount to de-risk technology, extending the runway through non-dilutive funding and creating a technology roadmap which validates the science as significant. Many science entrepreneurs feel too comfortable at this stage.
They get easily trapped in the endless loop of grant funding, overlooking the efforts to be put into corporate partnerships. This is a risky strategy. Corporate venture funds and strategic investors have a major impact on early-stage startup developments, alongside non-dilutive funding.
Not only can they be a check, but they can also be a customer, an advisor and a partner in the early prototype to manufacturing stages. The best strategic investors play a fundamental role in helping frontier tech ventures succeed because they need the technology the entrepreneurs are creating. They can be called corporate pathfinders, as they help deep tech founders identify, define and validate market opportunities.
Why are they so important? Let’s face the hard truth: Deep tech startups experience a very different evolution cycle than a traditional B2B company, let alone a B2C company. Go-to-market paths and commercialisation activation keys tend to be more complex. They require science entrepreneurs ready to embrace a steep learning curve.
For instance, a common pitfall is that early-stage teams overestimate the size of their hypothetical markets, which in practice turn out to be much smaller given the complexity of the developed solutions. Very complex does not relate to large market opportunities, it is rather the opposite.
Interrupting or reorienting projects that, over time, prove to be too small of an opportunity, should be much more common. Timing and market maturities are two other key elements to study carefully. Some technologies are just too early to reach and grow on the market, due to multiple structural factors.
Despite all the efforts deployed by the venture team, the market might not be ready for technology even if it is solving a very important problem.
Corporate pathfinders help founders find a way through the pre-industrialisation maze, co-drafting a roadmap to market, and challenging the possible paths. Once a joint market opportunity is validated, they are expected to morph into different players: corporate activators.
Leverage your corporate activators
Deep tech ventures face several challenges that strategic investors can help to address. Firstly, owing to tough global competition (and the inherent noise), it has become increasingly difficult to differentiate B2B offerings on the basis of functional benefits. It is especially the case in the advanced materials fields, in which “wonder materials” are regularly touted to investors and corporations alike.
Also Read: How to build deep tech startups across borders
With a growing number of market players, customers have to choose between many offerings that promise similar levels of quality. In addition, business customers frequently require tailored solutions for which it is more difficult to evaluate the quality before the purchase.
Secondly, the traditional narrative of B2B transactions based on highly rational decision processes in which customers exhaustively survey the available options in the marketplace and select their partners on the basis of objective performance dimensions — such as availability, functionality, and reliability– is far from the reality we face every day.
An alternative point of view to this traditional approach to B2B marketing is the interaction perspective, which emphasises the importance of personal selling and the relationship-building function of go-to-market and sales interactions. Those efforts take time. In terms of recurring revenue, they are a game changer over the medium term.
Finally, deep tech offerings are inherently complex: the product or delivery of a service requires customisation to the specific business needs of customers and the value chains they are embedded in. In such turbulent and fierce competition times, customers do not want to be passive.
They have become active entities willing to contribute to startup development: value co-creation has become the new paradigm in contemporary deep tech marketing. By involving strategic partners in the value creation process, founding teams strive to build stronger relationships and secure over time more loyal and satisfied corporate customers.
It is a win-win situation. Building on mutual trust, corporate activators start showcasing brands and products internally (i.e., spreading the word to business units), and externally with a selected range of existing clients and partners.
In conclusion, we cannot emphasise enough the effectiveness of corporate pathfinders in science-push market discovery, and corporate activators throughout a market penetration journey.
Co-assessment, co-innovation, co-development and co-design have become more pervasive. They emphasise the positive synergistic effects of those science-industry interactions, from building solid business networks to developing collaborative ecosystems, from Singapore to the world.
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