Stop Planning to Fail: Resolutions to avoid common mistakes in tech deployment
In my role as Chief Science Officer at New Energy Risk, I regularly see how companies struggle to balance the competing needs of technology development and deployment. Reaching market is a tug-of-war between the commercial imperative of demonstrating that all aspects of a technology are proven and the financial necessity of delivering product and building a revenue stream. By going to market too early, a company is likely to fail to find capital or customers. Going too late means having expended more time and money than necessary, and it’s possible the opportunity may have passed by.
Most companies have vastly different ideas for what they need to demonstrate, from a technology perspective, to reach their market. For hardware and industrial technology companies, there is little room for error because deploying at commercial scale requires raising significant capital to cover the large capex costs associated with the construction of manufacturing, processing, and energy facilities. Companies looking to self-develop projects generally need access to lower cost capital markets, primarily debt markets, to ensure project viability. Startups that sell their hardware need to scale beyond first-adopters and find big buyers with deep pockets. These markets are by definition risk-averse, with strict guidelines to ensure loans don’t go bad and capital expenditures aren’t squandered. So how much validation do new-to-the-world technologies need to convince hyper-skeptical banks and customers to lend or buy?
I’ve seen many entrepreneurs latch on to examples of irrational exuberance in startups like Theranos to justify a convenient answer: with a good story and slick marketing, willing customers and investors can be found with little to no technology validation. In fact, our experience at NER performing diligence on hundreds of capitally intensive technology companies shows the opposite: a business plan predicated on mythmaking and vaporware is a plan to fail. Technology should never appear to be a black box – financiers and customers do not want to bet on magic, despite the occasional counterexample. Rather, the path to capital involves leveraging technology testing in real-world conditions to demonstrate to others that the science and engineering are thoroughly understood and vetted.
New Year’s Resolutions for a new you
With 2019 now underway, I’m dusting off an entirely new idea that nobody on the internet has ever before tried: New Year’s Resolutions! Crazy idea, I know…but stick with me here: over the course of January, I’ll publish multiple posts outlining the common reasons companies that we review at NER fail to reach market, and what you can do in this brand new year to avoid them. All the while, I’ll update this post so you can find the full list in one place.
Can you succeed by breaking some of these resolutions? Maybe, we’ve seen it happen, but they are the exceptions. Without a doubt, failing to follow the advice laid out in the posts linked below will erode your chances of securing financing or closing a sale.
Remember, these resolutions are based on my experience at NER reviewing breakthrough technology companies, primarily in the energy and industrial technology sectors. But these rules should apply equally to any new technology company, whether hardware, software, energy, industrial, consumer, or otherwise.
- – Don’t declare victory too early
- – Utilize third-party validation
Also published on Medium.