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SaaS founders trying to cipher out what it guide to resurrect their next bout can concern to Point Nine ’s famousyearly SaaS Funding Napkin . ( The term refers to “ back of the napkin ” plans or calculation . )
Now European hardware deep tech team have a similar resourcefulness from First Momentum , a pre - seed monetary fund invest in technical B2B and deep tech startups .
With itsDeep Tech Hardware Napkin , the German VC firm hopes to democratize knowledge and benchmark on funding , squad , mathematical product , and commercialisation , break in down by stage . It focuses onEurope ’s blossoming deep technical school sector , which gives quite different issue from what one might see in global SaaS.
benchmark are particularly helpful to first - time founding father or those without a big web in startups and VC . This is especially rightful in deep technical school , where many entrepreneurs fare from a inquiry background . “ They do n’t screw what ’s a wrong decision or a in effect one , because they do n’t have datum on it ; they are not in entrepreneurial circles , they do n’t have 10 to 15 friends who have started companies before , ” general married person David Meiborg told TechCrunch .
First Momentum conduct a survey of 30 deep tech VCs from eight country to forestall this want of cognition and opaqueness , Meiborg said . The results are compiled not only in a “ table napkin ” but also a full theme .
The firm kept its observations to a minimum in the report , as it require it to be objective . But Meiborg and Maximilian Ochs ( one of the member of First Momentum ’s investment team ) check to discuss with TechCrunch one interesting finding : “ At seed and Series A , teams led by very proficient CEOs ( with no business scope ) raise importantly more backing than squad conduct by CEOs with a business - relate background . ”
There ’s a bit of sampling bias at play : “ Startups that pop up in our sight are relatively successful for a given stage because they either raised VC money , or they ’re about to . ” This means that the technical CEO in the sample are n’t fully representative ; if they care to raise financial support , it ’s likely because they also have commercial savviness .
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however , it shows that founding father with expert profile can benefit greatly if they summate business accomplishment and cognition to their toolset . With a strong pipeline ofuniversity spinouts , there ’s a tidy sum that Europe can achieve if founders can get it veracious .
First Momentum go for to avail these technical founders not only with this report but also with a community calledClueless No More , where draw a bead on “ European scientist entrepreneurs ” can learn from each other . For instance , they can discourse asore pointbrought up by Runa Capital familiar Francesco Ricciuti : “ Cap tables matter . Do n’t let poor technology transfer reduce your hazard of success , ” he admonish in the report .
How deep tech differs: Bigger rounds, longer road to success
The written report notes that pre - seed and Series A deep tech computer hardware rounds were heavy in 2023 than in 2022 , which First Momentum interpret as indicate growing investor appetite for the sphere . The data watch out : Globally , deep tech claimsa 20 % share of venture capital funding , up from about 10 % a decade ago . Some of this is the nature of the sphere : Because abstruse technical school requires important upfront investing , round have been typically large than average .
Intuitively , Meiborg already knew that the data point would depend unlike from the fair startup . “ The specific thing about deep tech investment is that you mainly take on technological risk , but it gets indemnify by less market or commercialization peril , ” he said . He gave the example of a startup that would find out a cancer cure : Hard to do , but not hard to sell .
This explains the account ’s finding that even at the Series A stage , only 29 % of startup have reach a quotable sales motion and meaningful revenue . Ochs did n’t discover this surprising but saw this as a check that get to revenue lead clip for a mystifying tech startup .
This call for inverse engineering , Ochs pronounce : Entrepreneurs need to key which milestones they can reach to get investor to finance their next round . First Momentum also refers to the process as “ de - gamble , ” with Ochs propose to founders to understand their costs , the gross margin they can realistically accomplish , and how expensive their end goal is .
Julien Macquet and Clement Van Driessen from Elaia , one of the VC firms that took part in the survey , also referred to the Series A hurdle , telling TechCrunch , “ where many computer hardware startups struggle due to insufficient trial impression of market fit . ” According to the twosome , this require a strategical approach with substantial capital — ideally from worldwide investors .
“ Engaging a orbicular investor syndication from twenty-four hours one ensures not only the necessary financial support for this capex - intensive journeying but also nurture critical support to reach primal business milepost , ” they observe .
