How well do you understand the costs (operational- and capital expenses) that could influence your success?
The path to innovation is laden with unique and often substantial cost drivers that set these ventures apart from their more conventional counterparts. To handle these costs effectively, you need to understand them clearly and plan your finances and resources carefully. For startups, managing these financial challenges is key to turning innovative ideas into successful technologies. We’ve outlined some of the key financial drivers for deep-tech startups:
Deep-tech startups often require significant R&D investment to develop and refine their core technology to reach a TRL allowing them to demonstrate their USP. This can include the cost of lab equipment, materials, and prototypes. Important to categorize between capital and operational expenses.
Highly specialized talent is required in deep-tech fields, and hiring top-tier scientists, engineers, and researchers can be expensive. Equally expensive can be the right business development and sales talent. Timing is also critical: bringing talent on board too early will not only be costly but will also demotivate them as there is little useful work to be done.
Securing patents and protecting IP is critical in deep-tech industries. Legal costs for patent applications, trademark registrations, and defending IP can be substantial. Saving money on patent attorneys can come back later to hunt the company when it putting its product and/or service in the market.
In sectors like biotech, medical devices, or aerospace, meeting regulatory requirements can be costly and time-consuming, involving clinical trials, certifications, and audits.
Depending on the technology, startups may need specialized equipment, lab space, or manufacturing facilities, which can involve significant capital expenditure. Not only capital expenditure needs to be considered here but also the additional effort and time to purchase and manage the equipment.
Deep-tech products often have longer development cycles, which means the startup may need to operate without revenue for an extended period, increasing the need for capital. This is one of the main differences between say a SaaS-based product company and a deep-tech company. On average, deep-tech startups require 2-4 years longer to reach a first revenue point.
Generating infrared light isn’t difficult. But generating it on a chip — reliably, efficiently, and compactly — is a different story. Traditional IR sources rely on heating elements. They radiate across a wide range of wavelengths, consume significant power, and require filters to isolate the signals. Manageable in labs, unworkable in wearables.
Innovation tends to follow a familiar path: first, we invent something powerful. Then we shrink it. Only then does it become an everyday part of the infrastructure. But one layer is still missing in today’s technology: sensing beyond the visible.
The journey from concept to market looks very different in traditional tech compared to deep tech. While traditional tech benefits from streamlined processes and quicker iteration, deep tech ventures face longer, more complex cycles due to the groundbreaking nature of their innovations.