The combination of both public and private funding catalyses the growth of deep tech start-ups, enabling them to advance their technologies to market-readiness, while building a successful business. Before investing, public funding evaluators and private investors conduct a rigorous assessment of high-impact companies. When making investment decisions, investors undertake a comprehensive analysis of the company, evaluating various factors such as the uniqueness of the innovation, technological distinctiveness, market prospects, and the proficiency of the core team.
In this article, we will explore the top 4 factors stakeholders look for before investing in a deep tech start-up.
- Breakthrough Innovations
The deep-tech sector's ability to foster innovation and its potential to disrupt traditional industries is a vital factor for investors. This sector involves cutting-edge technologies in areas such as artificial intelligence, deep learning, space tech, life sciences, agritech, cleantech and advanced materials. Stakeholders look for innovations that have the potential to create entirely new markets, drive efficiency gains, and address pressing global challenges, further fueling their interest in deep-tech startups.
These investors exhibit a strong inclination towards the innovative nature of technology and its ability to set itself apart from existing market technologies, opening doors to entirely novel opportunities within well-established markets. Additionally, deep-tech startup founders must prioritise building a robust intellectual property portfolio, strategically filing for patents, trademarks, and copyrights to protect their innovations. This approach not only safeguards their unique ideas and products but also positions them favourably in collaborations and potential partnerships. Intellectual property becomes a cornerstone of their business strategy, allowing them to confidently invest in further research and development, knowing their creations are legally protected
Both public funding evaluators and private investors express keen interest in the potential societal impact that technology can wield. Through the introduction of pioneering solutions, deep-tech startups are poised to address entirely new sets of challenges. The uniqueness of their technology emerges as a critical factor that distinguishes deep-impact startups from their peers, thereby significantly enhancing their prospects for attracting investments.
2. Long-term Impact-Driven Solutions for Ever-Evolving Market
Public funding evaluators and private investors share a common interest in identifying and supporting initiatives that demonstrate not only longevity but also adaptability in the face of an ever-evolving marketplace. Enterprises prioritising the development and application of advanced technologies receive heightened attention. This preference is rooted in their potential to drive substantial and lasting transformations within their respective sectors.
Criteria for garnering attention and investment extend beyond short-term gains and market trends. Stakeholders look for companies committed to continuous innovation and the integration of new technologies into their operations. These organisations exhibit resilience against market fluctuations and possess the ability to influence industry standards and market dynamics.This emphasis on deep-impact companies underscores their potential to meet current market demands and proactively address future challenges. They represent a strategic investment in solutions that endure and pioneer innovation in rapidly evolving industries.
3. Market Potential and Size
In the realm of venture capital and startup investment, potential stakeholders are on a constant quest for opportunities with substantial mark3.et potential and size. Startups operating in the realm of deep technology, particularly those that tackle global challenges or offer innovative solutions to existing market voids, tend to emerge as particularly attractive prospects for investors. Crucially, investors are drawn to ventures that exhibit the capacity to scale rapidly. This ability to scale is integral to capturing a commanding market presence and often requires substantial financial and strategic resources. Consequently, startups that can tap into the resources made available through various funding programs, whether public or private, become exceedingly appealing to investors.
The relationship between investors and startups hinges upon the evaluation of market potential, with an emphasis on size and scalability.
4. Skilled Team
Investors place a significant emphasis on evaluating the skilled and committed team behind a deep tech start-up. They recognize that the success of a venture depends heavily on the capabilities and dedication of the individuals driving it forward. A capable team with the expertise and guidance is required to facilitate the company's expansion.
First and foremost, investors look for expertise within the founding team. They evaluate the technical proficiency and knowledge of the team members, seeking individuals who possess a deep understanding of the specific technology or innovation that the start-up is built upon. This expertise is crucial as it allows the team to navigate complex technical challenges, make informed decisions, and develop cutting-edge solutions.
Additionally, investors consider the commercial experience of the team members. They seek individuals who have a solid grasp of the market dynamics, customer needs, and potential obstacles within the industry. This experience enables the team to anticipate market trends, identify competitive advantages, and make strategic choices that align with the start-up's goals.
Investing in deep tech start-ups requires careful evaluation of several key factors. Market potential and size, technology differentiation, a strong intellectual property portfolio, a skilled and committed team, and traction and validation are among the top aspects that investors consider.
SBIR and EIC funding can provide a significant boost to deep tech startups. After receiving such grants, startups still require additional funding from venture capitalists to scale their operations and launch their products or services in the market.