As was covered in our previous articles, Design Services companies need to be able to deal with cyclical market conditions. One of the instruments pointed at were R&D grants. R&D grants are in fact a multiple edged sword. They provide a second revenue stream, obviously still tied to engineering resources, but driven by the R&D programs. R&D grants are available on a global scale. If you operate (not necessarily headquartered) in the EU or North America, you have a wide selection of programs to choose from. This also facilitates your ability to start “slowly”. Where experienced and established companies can define a specific R&D program and operate as a lead and invite key companies to participate, early-stage design services companies will need to search for a proper fit. Important here is to understand that the program is not to make easy money, its intention is to help the company to drive its strategic roadmap. Most R&D grants cover up to 80% of your operational expenses, sometimes a bit more, sometimes a bit less. It is, however, to be regarded and used as an investment in the future of the company. Participating in a project just to keep your engineers busy might sound like a good alternative to having them fiddling their thumbs. However, if the project does not deliver future value for the company, you are wasting time and effort. From the start of the company, ensure you have a few potential project outlines at hand and use the brokerage services that some programs offer. Such services can help you connect with the right partners who, in the future, might even turn out to become customers. It is important to focus on grant programs as a way to further your strategic roadmap through (advanced) R&D or even productizing existing R&D projects.
Your demonstrated ability to participate and successfully deliver within an R&D project will ensure you will receive future invitations and will also increase your application score.
When writing your part of the project ensure that you apply some level of flexibility when it comes to your resources. As discussed, one of the functions of such projects is to allow you to maintain your engineering staff, even when customers have put their projects on hold. By increasing the resources for an R&D project you are able to deliver faster. At the same time, you can consider swapping out contractors and swapping in employed staff as a way of further cost reduction. Obviously, swapping staff during a project is not recommended but at times it might be a relevant option (for instance when starting the next work package).
As a final remark, make sure your website highlights not only the successful customer projects but also the successful R&D projects.
Many founders underestimate how different deep tech fundraising really is. Deep tech funding rounds don’t follow the same rules as software funding rounds. These rounds take more time, they are larger, and are validation-driven due to long-lasting R&D cycles and capital intensity. Imagine that each round answers the question, then what question would it be?
Early exits are named as such because the exit constitutes an interruption of the regular venture path. There are several paths to an early exit, some organized, some happen by coincidence. For startups, it is important to have a clear focus on the path forward and, based on the technology and product it is developing, to understand the startup’s value path.
TD Shepherd congratulates Keiron Printing Technologies on successful raising Series A round led by Invest-NL. Keiron Printing Technologies B.V. (Eindhoven) commercializes a laser-induced forward transfer (LIFT) platform for solder paste deposition in electronics assembly.