Beyond Deep Tech Funding: The Critical Role of Human Capital

"The lack of commercial expertise in a climate hardware startup's team is the biggest shortcoming of climate hardware companies according to investors."

Similarly, last year the Swedish Innovation Agency Vinnova stated "We talk about innovations, but we must not forget that if there is no entrepreneurial force in it, nothing will happen" (Link to article) and in their report "Accelerating European deep tech" it was stated that "Having a background in academia means that deep tech ventures often lack business expertise and networks."

It's therefore essential to start integrating discussions on how to foster the right human capital into the broader narrative of financing and scaling deep tech ventures. Investors recognise that their capital is most effectively utilised when paired with the right founding team. This means that they not only invest in the technology, or rather the potential in a future technological solution, but also in the people who will drive its development and commercialisation, hands-on.

Essential Skills for Deep Tech Entrepreneurs

These individuals are special because they must possess a unique combination of business acumen, entrepreneurial drive, and technical expertise. Some examples of the skills they need to possess are:

• Communication Skills: Being able to translate complex scientific concepts into a language that is easily understood by non-scientists. This skill is not just about simplifying the science but also actively engaging with stakeholders to understand how to steer developments going forward and making it compelling and relevant to the needs of potential investors, industrial stakeholders, customers, and, of course, our planet and its people.
• Fundraising Abilities: Securing funding is one of the challenging aspects of building and scaling a deep tech venture. These entrepreneurs must be adept at raising money from a variety of sources, including angel investors, venture capital (VC) funds, and banks. As these entities are not necessarily experts of the technical nuances of the solutions being developed, it makes it even more essential to communicate the potential and viability of the technology clearly, convincingly, and objectively.
• Long-term Vision and Patience: Having the patience and understanding that turning scientific discoveries into real-world hardware solutions is a lengthy and capital-intensive process are also crucial. Entrepreneurs in this space must be prepared for a marathon, not a sprint, recognising that substantial time and resources are needed to bring their vision to fruition. They understand that it is not one proof-of-concept and then sales will follow, but rather focusing on working in iterations with clear development steps and goals, and multiple fundraising rounds.
• Talent Acquisition: Attracting and retaining the right talent and competence is also a core skill of these individuals. This includes not only niche technical experts that might have to relocate to a new location, but also individuals with skills in business development, production, marketing, and operations, and of course senior advisors. A strong team is often a key factor in the success of deep tech startups, as it brings together diverse expertise and perspectives and helps de-risk the investment case.
• Negotiation and People Skills: To turn an invention into an innovation also requires strong negotiation and people skills. Effective negotiation is especially vital for deep tech venture founders, who often need to gain respect and trust among large industrial corporations with many layers of decision-making. Navigating these complex organisational structures requires the ability to communicate effectively, build relationships, and persuade stakeholders. Agreements such as letter of intent (LOI), memorandum of understanding (MOU), or off-take agreements, are nowadays often required by deep tech investors to help them further de-risk the investment case. Without effective negotiation and people skills, it will be difficult to successfully close these discussions.