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Sunday, July 14, 2024

How to fundraise when your deep tech startup sounds like sci-fi

Wait, is this even physically possible?”

Fundraising is hard for every startup, but only deep tech startups face questions like this from VCs. Innovation often does not come without issues, and there are problems regardless of how good your concept is, or how superior your technology is.

Your pitch may well be the first time a VC has even heard of a concept, so how can they possibly work out how to invest in your idea when it sounds like sci-fi?

No one wants to invest in the next Theranos

A VC’s job is to find the next biggest company. To do this, they need to understand what the company does and how it makes money. VCs hear big claims every day and don’t want to be taken for fools.

As a result, they usually treat new ideas with skepticism and tend to avoid investing when they don’t understand something. This disadvantages deep tech and those working on something that’s truly cutting-edge.

As with any other fundraising challenge, the key is to put yourself in the investor’s shoes and build your pitch around that.

Before you start fundraising, it’s worth asking yourself: How likely is it that a VC will truly understand my tech or even have heard of it before? How much does the public know about this area? Is it being reported in the general media, or is it still only being discussed in specialist journals?

Would a VC need to be very familiar with the latest research in your area or have attended a specialist conference? Think about how your claims will sound if your pitch is the first time someone has heard of this idea.

The thing is, even if an investor doesn’t think your claims are fraudulent — as was the case for years with Theranos — you probably won’t seem credible if you’re the first person making this claim. How can you deal with this skepticism and help VCs go from thinking, “This is sci-fi,” to “This is the next big thing”?

You won’t get a quick yes

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