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Wait, is this? Is it even physically possible?”
Raising funds is difficult for every startup, but only deep tech startups face such questions 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 might be the first time a VC has heard of a concept, so how can they possibly work out how to invest in your idea when it sounds like science-fiction?
Nobody 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 considered foolish.
As a result, they generally view new ideas with suspicion and avoid investing when they do not understand something. This disadvantages those working on deep technology and something that is truly cutting edge.
Like any other fundraising challenge, the key thing is to put yourself in the investor’s shoes and build your strategy accordingly.
Before you start raising money, it’s worth asking yourself: How likely is it that a VC will really understand my technology or have even 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 discussed in specialist journals?
Does a VC have to be very familiar with the latest research in your field or attend any expert conferences? Think about how your claims would sound if this was the first time someone heard about the 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 one to make this claim. How can you deal with this skepticism and help VCs move beyond thinking, “This is science-fiction,” “This is the next big thing”?
