Deep-Tech Funding Profile and Ambition

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?

Pre-Seed → Does it work?

Seed → Can it scale technically?

Series A → Is there market validation?

Series B → Can we industrialize?

Series C+ → Can we scale globally?

But first, ask yourself: are you building to push your technology to the next milestone, or just building?

At TD Shepherd, we’ve seen many founders who struggle to define their ambition clearly. Starting with ambition helps define your target, your next steps, and the gaps at your current stage. It will also help you understand your funding profile and path – when raising a Series A, a deep-tech startup shouldn’t really come out with the message that this will be the last round for them – it never is. Understanding your funding profile comes from the general deep-tech funding profiles but, equally, from finding the relevant look-alikes and determine their funding track.

As a general principle, it is always important to understand what type of VC you want to approach for your funding. That comes down to the people running the fund, the partners (because you will need to work with them). But it also comes down to the lifetime of the fund and the amount of money it reserves for future rounds. Bringing on a VC which cannot participate in the next round is a mistake as it signals the wrong message when you raise that next round. At a minimum a VC should be able to participate in the next round [with a substantial amount]. Problem is that at the time of raising your current round, there usually is a lot of time pressure, often forcing startups to not look beyond the first page of a VC’s profile.