As mentioned, deep tech ventures are not receiving VC investments in the early stages, which contributes to further challenges in achieving their high potential. META (Regional Development Agengy of Italy), under InvestHorizon project, has supported more than 200 European early-stage deep tech ventures over the last three years. These ventures have raised more than 230M€, with the average timeframe to close a deal after participating in the program of 9 months. These excellent and rapid results have been possible as a result of META’s “new approach” offered to address investment readiness based on two main elements:
- Peer-to-peer approach by exchanging experiences with other CEOs: CEOs of deep tech start-ups received feedback on specific business challenges from other European deep tech peers.
- Presenting to investors by getting in touch with the right investors: deep tech startups were matched and presented to tailored groups of deep tech investors.
One of their main conclusions is that deep technology is usually developed by privileged researchers in well-equipped laboratories operating within a small community of vertical experts. Thus, deep tech entrepreneurs are often scientists who are passionate about their technology. They are excellent at science, but less able to build the narrative that start-ups need to capture the attention of investors, thus, they are not "investor ready". Investment readiness is the capacity of an entrepreneur, who is looking for finance, to understand the expectations of an investor and to be able to respond to them. This is the reason why it is crucial for deep tech teams to increase their investment readiness if they are looking to raise funds.
To better understand how deep tech start-ups address investment readiness issues and which solutions they adopt, META Group interviewed 45 CEOs of such companies. The main challenge to access funding for deep tech start-ups in the EU is the proper matching with the investors and to identify and access the right network of investors. In addition, respondents warned about the difficulty of meeting the investors' expectations when approaching them as well as creating the right speech to investors.
To deal with these challenges, start-ups try to participate in pitch events and workshops with the aim of increasing their investors' network or looking for external support as consultants.
As a conclusion, more than 30% of CEOs interviewed stated that they have to spend too much time in scouting for investors, presenting and participating in pitch events and even these solutions do not guarantee any success. They said how frustrating it is to spend time pitching at events and then having to realise that the investors' network behind it is poor or not tailored, or not receiving feedback from investors after the pitch.
MERA, has shown their efforts to boost the development of the enterprise network framework. Not only becoming a part of the EU project InvestHorizon but also, doing his own study to provide the best solutions.
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