Welcome back to Deep Tech Catalyst, the channel where science meets venture!
Today we have Marc Perron, a business consultant and Deep Tech Expert.
We’ll delve into the intricate process of introducing groundbreaking technology to the market, exploring challenges such as scaling, intellectual property rights, market traction, and Freedom to Operate (FTO) with invaluable insights and strategies tailored for success in the ever-evolving landscape of innovation.
Join us as we navigate the fundamental principles and actionable approaches to unlocking the full commercial potential of Deep Tech innovations.
Let’s dive into it!
🎧 Prefer to listen?
Deep Tech Commercialization 101
Embark on the journey of Deep Tech commercialization requires a keen understanding of the intricate interplay between cutting-edge technology and market dynamics.
In Deep Tech Commercialization 101, we delve into the fundamental distinctions between Software as a Service (SAS) companies and deep tech ventures, emphasizing the pivotal role of intellectual property (IP) and rigorous research and development (R&D) efforts.
Through practical insights and real-world examples, we navigate the challenges of transitioning technology from the confines of the lab to the competitive landscape of the market, shedding light on common errors and strategies for success.
Join us as we explore the nuances of market viability assessment, investor traction, and the critical importance of freedom to operate in scaling efforts, providing entrepreneurs with a comprehensive toolkit for navigating the complexities of deep tech commercialization.
🤼 SaaS vs Deep Tech: Divergent Paths in Commercialization
Software as a Service is essentially a business model. Take Google, for instance; it's a Deep Tech company. Despite offering free products, they've somehow morphed into a sort of software-as-a-service model.
However, the crux of the matter lies in the Intellectual Property (IP) and technology origins. With SaaS, you might whip up something in a garage over a weekend—a basic website idea on a Friday could be sold by Monday. It's feasible. Yet, in Deep Tech, that's not the case. Here, you're looking at years of rigorous scientific R&D.
At the end of it all, you're dealing with a highly technical product, perhaps an algorithm deployed on a website, but you can't conjure that up in a couple of days; it's just not possible. So, the fundamental disparity lies in the source and complexity of the technology.
This stands in stark contrast to Deep Tech companies, where technologies are often backed by patents, extensive research, and what feels almost like magic. It's about offering a product that harnesses this technology, which could eventually manifest as a software-as-a-service offering. Hence, it's not just about the business model; it's about the type of business itself—a revenue model, if you will.
🔒 Challenges in Transitioning Technology (and Mindset) from Lab to Market
As for the main challenges scientists encounter when transitioning technology from the lab to the market, I'd say the biggest hurdle is breaking free from the confines of academia. This is crucial.
We could delve into this topic for hours, but if I were to summarize and send a clear message to the audience, it would be this: you need to step out of the university bubble.
So, it's essential to recognize that the university is the starting point of your journey.
Then it’s necessary to decide whether to develop an idea as a research project or as a business activity. For instance, a test for this is your reaction to new ideas.
If your immediate thought is, "Ah, this would make a great research project," then your mind is still tethered to research.
Instead, if you find yourself thinking, "This could be a product that enhances people's lives," then you're on the right path toward market readiness.
It's vital to understand this.
🛥 Navigating Market Viability and Common Errors
Regarding aspiring Deep Tech founders understanding the potential success of their product ideas in the market and avoiding common errors in identifying market niches, this is the starting point: out of every 100 attempts, maybe 5 will succeed.
Pursuing such lofty goals demands resilience. Sure, your determination to change the world might drive you, and that's commendable, but remember, it's an uphill battle.
There's immense inertia in the world, especially in established industries. However, technology is your ally in this endeavor. So, while the journey is arduous, you have the tools to navigate it effectively.
🗣 Assessing Market Potential = Engage Potential Customers
To evaluate your chances of success here's something hardly anyone does, yet it's quite straightforward. Assuming you have a solid technology at hand, let's skip the urge to refine it further. Most tend to dwell in the lab, tweaking minor details, but no.
Here’s a cost-effective approach:
Grab a sheet of paper and a pen.
Sketch out something resembling a product.
Now, identify its target industry and seek out retirees or professionals working in related companies.
Then, arrange meetings with individuals from these industries within your city.
Arrange a lunch meeting and simply discuss your product with them, listening attentively to their feedback.
After meeting with around ten people, you'll likely notice common threads in their feedback.
Additionally, they might provide insights on how to position your product in the market, using terminology specific to the industry that you may not have been aware of. This exercise costs nothing but time and can provide invaluable market insights.
Furthermore, when you eventually meet with investors and they inquire about traction, having engaged in these discussions showcases proactive market exploration. Instead of saying, "I've been in the lab," you can confidently state, "I've met with ten industry professionals in my city, and here's what they've said." This demonstrates initiative and market awareness, which investors find encouraging.
🧲 Must-Have vs Nice to Have Products
Now, onto differentiating between a "nice to have" and a "must-have" product. This is crucial. When you have a "must-have" product, it's crystal clear. People call you back, eagerly asking when it will be available. Conversely, with a "nice to have" product, initial interest may be lukewarm, and you'll find yourself needing to follow up repeatedly.
Sure, you'll follow up in either scenario, but the distinction lies in the intensity of interest. With a "must-have," people express a burning desire for your product. They think about it constantly and would pay a premium to have it immediately.
The core of your technology should aim for this level of necessity
Think of Henry Ford's adage: "If I had asked people what they wanted, they would have said faster horses." Your technology should offer a significant leap forward, akin to providing a car instead of a faster horse. For instance, if existing solutions are horses, yours should be a tenfold improvement in speed. However, be mindful of the form factor.
Even if your horse is incredibly fast, if it's cumbersome or emits foul odors, it won't gain traction. It's about aligning technological advancements with user acceptance.
Furthermore, consider the pricing aspect.
If your revolutionary horse is priced astronomically higher than existing solutions, it might not gain widespread adoption. Ensure your product is not only innovative but also accessible in terms of both form factor and price. However, it depends on the stages of the tech and the timeline of the company.
🎯 Prioritizing Metrics for Investor Traction
In this scenario, assuming you have a working prototype at Technology Readiness Level (TRL) 4 or 5 and have received positive feedback from a potential customer segment, there are several key metrics to prioritize to demonstrate traction to investors in the preceding and subsequent stages.
Firstly, it's crucial to assess the quality of your customers. While it's impressive to have high-profile clients such as big research institutions, these may not be indicative of scalable and replicable business opportunities from a venture capital perspective.
Instead, focus on customers that offer potential for scalability. For instance, consider choosing a larger company with multiple business units globally over a smaller, single-location company. Selling to a larger entity increases the possibility of expansion within the organization, potentially leading to additional sales across various branches or units.
Therefore, the quality of the customer base plays a pivotal role in demonstrating traction to investors.
Geographic concentration is an important metric to consider
If you can successfully sell your product within your city or state, it indicates a level of market penetration and acceptance. This localized success can serve as a precursor to broader expansion plans.
Demonstrating an ability to scale regionally or nationally enhances investor confidence in the potential for future growth and expansion.
By emphasizing these metrics—quality of customers and geographic concentration—you provide investors with insights into the scalability and market acceptance of your product. This, in turn, bolsters confidence in the viability of your business model and its potential for success in the subsequent stages of development and expansion.
🏘 Understanding FTO in Commercialization
Certainly! Understanding the differences between "freedom to operate" (FTO) and intellectual property (IP) is crucial, especially when planning to scale a startup internationally.
Imagine you own a house—a valuable invention—and you want to expand it to neighboring lands. However, to reach these lands, you must pass through your neighbor's property. Here, your ownership of the house represents your IP, while your neighbor's property represents existing patents owned by other entities.
Freedom to operate is like having permission from your neighbor to access your property. In the business world, it means being able to conduct your operations without infringing on others' patents or intellectual property rights.
For instance, let's consider the battery industry, crucial in the era of electrification. You might have your own battery technology (IP), but a major company could hold numerous patents related to batteries. If your invention overlaps with their patents, you may face legal issues. Therefore, conducting a thorough analysis of existing patents in your field is vital. It's about understanding the landscape and mitigating risks.
When conducting due diligence for your startup, investors will scrutinize your freedom to operate. Simply saying, "I don't know," is a red flag. Instead, you should demonstrate awareness of existing patents and outline strategies to navigate potential obstacles. This might involve licensing agreements or focusing on areas where patents don't apply.
However, achieving complete certainty of freedom to operate is challenging. It's about minimizing risks rather than eliminating them. Working closely with a patent agent or lawyer is essential. While technical expertise is crucial, legal intricacies require specialized knowledge to ensure compliance and mitigate risks effectively.
In essence, understanding FTO versus IP is about ensuring your innovation can flourish without stepping on others' toes. It's a balancing act of technical prowess, legal diligence, and strategic planning to navigate the complex landscape of intellectual property rights.
This is all for today!
Wanna be more involved?
👉🏻 Follow our LinkedIn page and drop a DM!
👉🏻 Write us a line here: info@thescenarionist.org
See you next week! 👋
