We encounter startups in their early stages in different roles. Sometimes, we encounter them as part of our due diligence efforts for an investor or investment syndicate. Sometimes, we encounter them as part of our fundraising support services. Generally, when evaluating startups, we apply somewhere between 14 and 18 value pillars that we fill in during the process. Depending on what stage a startup is in, these pillars can be fully defined (say Series B) or are still in the stages of development (“filling in”).
The value pillar of customer traction is relevant in ALL stages of the startup, whether you are already generating revenue or when you are still in the PoC stage. As early as during the development of your PoC, you need to interact with your potential customers. You need to have relevant discussions with them about the specific characteristics of the PoC and what decisive advantages a potential customer would have to convince them to buy your product. Most startups will have had their discussions with potential customers and extracted some level of value out of these encounters. However, very few have gone the whole way – here are a few steps often missing:
Startups in the period of their product development (PoC, MVP, …) are often working under high pressure and with a small team, making it tempting to take shortcuts. The pressure of getting your fundraising done before you run out of money is also an important driver. However, you cannot take shortcuts on the coverage of your customer traction. Not only is it something that is evaluated in detail by potential investors (but then again, what is not?), but it determines to a high degree the success of your product launch. Any additional time spent with potential customers before the product release will pay itself back handsomely.
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For most deep-tech entrepreneurs, a familiar fact: a deep-tech startup takes longer to commercialize than regular software-based and/or SaaS-based startups. The gap between proof of concept and actual revenue takes longer. The following graph provides some insight into why things take longer.
The TD Shepherd team is happy to congratulate the Qualinx B.V. team on successfully raising €20 million from Dutch investors. TD Shepherd has provided strategic support to Qualinx over the years (starting in 2018), witnessing each step of their journey; their growth and success, makes us truly proud of their outstanding achievements.
If there’s one thing we’ve learned about surviving the Valley of Death in deep tech, it’s this: don’t go it alone. This stage is all about leveraging relationships, and corporate partnerships can be your most valuable lifeline. The key is to think beyond customers.