Navigating the Deep Tech Funding Landscape: Strategies for Securing Investment and Accelerating Commercialization
Guest Post by Mark M.J. Scott
President of Northern Pixels Inc
In the current economic climate, marked by the Federal Reserve’s decision to maintain US interest rates at a 25-year high, deep tech start-ups face a challenging environment for securing venture capital (VC) funding. With a significant decline in global start-up investment from $462 billion in 2022 to $285 billion in 2023, VCs are becoming increasingly cautious, seeking start-ups with clear indicators of “product-market fit” and a solid “go-to-market” strategy. For deep tech founders, especially those in the pre-commercial stage, developing and executing strategies to demonstrate strong product-market fit and a well-structured go-to-market strategy is crucial for strengthening their negotiating position and securing the next funding round with favorable equity terms.
Assessing Your Current Positioning and Go-to-Market Foundation
The first step for deep tech founders is to assess their current positioning and go-to-market foundation. This involves ensuring that the start-up’s target markets, buyer personas, unique value propositions, competitive landscape, and key differentiators are well-defined and clear. A solid go-to-market foundation should address the challenges faced by target markets and the negative consequences of those challenges, while also highlighting the positive business outcomes of the start-up’s unique value propositions.
Developing a “Whole Product” Strategy
A “Whole Product” strategy is essential for deep tech start-ups. This strategy encompasses the ecosystem into which the product will integrate, including the tech stack, integrators, and professional service providers. Many of these players can become invaluable advocates and champions for the product and vision. Getting outside feedback to test the positioning and go-to-market foundation is crucial before engaging advocates and target industry opinion leaders more broadly.
Leveraging Advocates and Industry Key Opinion Leaders
Advocates and industry key opinion leaders play a critical role in securing a good funding partner and accelerating the commercialization plan. Deep tech founders should shortlist who they want to engage and develop a strategy to capture their interest and leverage their support in ways that can be publicly referenced and amplified to meet funding objectives. While explicit written endorsements may be rare at the early stages, there are marketing tactics that can be used to harness the passion of these leaders for solving industry challenges with innovation.
Considering a Media Strategy
A media strategy is important for building awareness with key audiences and amplifying the messages of advocates and champions. This not only attracts more advocate supporters but also builds positive awareness with target markets, go-to-market partners, and prospective investors. Top-tier media in business, industry, and technology will almost always want to support emerging innovation stories with established voices who can validate expected positive business outcomes.
Leveraging Learned Strategies
Deep tech founders should re-examine their investment strategy and key materials, critically assessing the balance between the technical presentation and go-to-market strategy, as well as any early signals of market acceptance. By strengthening the go-to-market positioning, founders can also strengthen their negotiating position and choose the best VC partner with favorable terms.
In conclusion, securing the next funding round for deep tech start-ups requires more than just showcasing research lab results. It demands a comprehensive approach that includes a solid go-to-market strategy, leveraging advocates and industry leaders, and implementing a media strategy to build awareness and credibility. By focusing on these areas, deep tech founders can improve their chances of securing funding with favorable terms and accelerate their path to commercialization success.
About the author:
Mark M.J. Scott is President of Northern Pixels Inc. a firm specialized in improving and accelerating the success of deep tech start-ups. Mark has played a leadership role in growing multiple deep tech successes, including a cryptography company acquired by AppDirect, an Optics and Photonics company acquired by Toyota and a pioneering Enterprise Low Code Application Platform, Truecontext, acquired by Battery Ventures in 2024. Mark was recently hired by the Quebec, Canada Government’s Quantum Innovation Zone, $435M funded, to devise a commercial strategy to bolster start-up success.