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Capital Intensity and Financial Plan Basics for Deep Tech Founders | Deep Tech Catalyst

A chat with Gijs van der Hulst, Founding Partner @ Positron Ventures

Welcome to the 6th episode of 'Deep Tech Catalyst,' the video podcast that delves into the journey of transforming groundbreaking scientific discoveries into investable deep tech startups.

In this enlightening episode, we host Gijs van der Hulst, Founding Partner @ Positron Ventures, to explore the basics of capital efficiency and strategic financial planning for Deep Tech founders.

We'll delve into the critical aspects of tackling the most challenging problems first, understanding the journey from concept to market reality, and the importance of strategic planning during non-revenue phases.

Tune in to this episode of Deep Tech Catalyst to gain invaluable insights and strategies for making your deep tech venture not only investable but also primed for substantial impact in the world of science and technology entrepreneurship.

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💰 Capital Efficiency in Deep Tech

Capital efficiency is the art of achieving business milestones while minimizing funding. It's of paramount importance in Deep Tech, characterized by high capital needs, prolonged development phases, and inherent risks. Efficient capital use not only conserves resources but also attracts potential investors who value prudent financial management.

Challenges for Scientists

Scientists transitioning from academic research to entrepreneurship face a steep learning curve in financial management. They need to adapt to a mindset where every dollar counts, balancing the need for quality and advancement against the backdrop of limited resources. This balance is particularly challenging in capital-intensive fields like deep tech, where upfront costs can be substantial.

📈 Financial Planning & Strategy in Pre-Seed Stage

In the world of startups, prioritizing the most challenging issues is key.

Addressing these problems first can significantly reduce the overall risk of the venture. This approach requires a deep understanding of the project's core challenges and a strategic plan to tackle them effectively.

(P&L) means Profit and Loss, startups typically face a period of losses before establishing a customer base and generating revenue.

Most startups, especially in Deep Tech, initially operate at a loss. Planning for these non-revenue phases involves not just financial preparation but also setting realistic milestones that mark progress toward profitability. This stage demands rigorous financial discipline and a clear vision for achieving revenue-generating operations.

Planning for this phase is critical. It involves understanding the path from concept to market, anticipating potential financial pitfalls, and preparing for them.

Marketing and Sales: Having a superior product is not enough; effective marketing and sales strategies are essential. These strategies are often overlooked by technically focused teams but are critical for gaining market traction. The cost of marketing and selling must be factored into financial plans, acknowledging that capturing market share requires both a great product and great promotion.

💸 Pricing Strategy in Early-Stage Deep Tech

In the pre-seed stages of Deep Tech ventures, the pricing strategy is not as critical as the research and development aspect, which is the substantial portion of absorbing capital at this phase. Therefore, it's not as important to have a clear pricing idea in the pre-seed stage as it is to have a solid, functioning technology that solves a specific problem. The focus should be on developing a robust technological solution, as this forms the foundation upon which pricing and other market strategies can later be built.

🤔 What is Techno-Economic Analysis?

It’s a critical process that involves a comprehensive breakdown of what it takes to develop a product. It examines every aspect from the cost of components to the scalability of manufacturing processes. Techno-economic analysis helps in identifying the most cost-effective methods and materials for production.

Importance for Startups: For hardware startups, this analysis is indispensable. It allows them to foresee and plan for the economic realities of production and scaling. This understanding is crucial for making informed decisions that can impact the long-term viability and profitability of the venture.

🚀 Future of Deep Tech in Europe

The trajectory of deep tech advancements is hard to predict. However, focusing on pressing global challenges, such as environmental sustainability and health, provides a clear direction for meaningful innovation.

Sectors like energy generation, agriculture, and manufacturing are ripe for deep tech advancements. Breakthroughs in these areas could have significant impacts on society and the environment, making them attractive fields for both investment and research.

This is all for today! 👋

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