What is different about deep tech startups?

All startups involve innovation in some area - some startups innovate in software, others in data science and analytics, others in hardware, others in business models, and still others in hard tech.

But there are startups that are based on disruptive innovation in deep tech and/or fundamental science research. These startups typically have a different timeline than tech-based startups for the following reasons:

  • It takes more time, resources, and specialized talent to develop and validate a science-based innovation to the point where it is ready for commercialization.
  • If the invention involves the creation of a new substance (e.g. a polymer that removes heavy metal from water) or a new process (e.g. a coating to make the inside of ketchup bottles non-stick), it will take time to invent a new manufacturing process to produce the substance or apply the process at scale.
  • If the new process manufacturing procedure is unlike anything that existing manufacturers already know how to do, the startup may need to build their own manufacturing facility - which is very capital expensive and can take a very long time.

For all the above reasons and more, deep tech startups usually take longer to come to fruition and require more capital from a cumulative investment standpoint. Most traditional VC funds are optimized to work with tech based startups and are often set up as a 10 year fund. This timeline is too short for a science based startup. Therefore it can be difficult for a science based startup to raise funds from the same sources and with the same trajectory as ordinary tech startups. The typical angel, seed, A, B, C round structure rarely apply.

So what do most people do? They often stay in the lab longer to take advantage of research grant funding to harden and mature the scientific invention. Once the technology leaves the university, the startup team often needs to turn to additional equity-free grant funding, either from the federal government (e.g. SBIR grants from the National Science Foundation) or from other grant funding sources such as non-profits that are interested in advancing science in your area of interest. 

Another difference is the ability of a deep tech startup to apply traditional iterative startup techniques to build their business. For most tech startups, the best path forward is to define the problem and understand the customer and end user before developing the solution. The solution is arrived at via iterative experiments in the market with end users. For a deep tech startup, this is not exactly the path - as the science forms the basis of the IP (intellectual property) of the startup. So they have to work backwards and find a problem that is worth solving and can be solved by the scientific invention - and then validate that the market is big enough. This is harder than starting with the problem - and will take more time and resources.

Deep tech innovations have the potential to change the world. If you have a significant scientific invention and you want to commercialize it - go for it! Just read up on everything you can find about grant based funding, talk to others who have done it before you, and build out your knowledge of how to move forward. Your path will look different from that of a tech startup (Even for hard tech like robotics or industrial automation) and that's ok. You just need to be informed and plan for success.

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