Shaheen in 2018 Farashi from Lux Capital and I discussed the emergence of alternative proteins in coffee and other hot topics of the day. At some point, Shaheen asked me what I think was a rhetorical question:
Our portfolio companies are good as pilot projects, but they face challenges in moving from pilot to full commercial deployment. How do your companies get through the pilot stage?
I did not have a good answer, and I was in thought for a long time after our conversation. As a Deep Tech venture investor, the companies in my portfolio are destined to face commercialization challenges as they scale from small pilot projects. This is a serious, widespread industry problem.
But big problems give way to big rewards, and while I don’t think I have a panacea, I know of three ways deep tech founders can make sure their time in pilot cleanup ends with deployment.
Define Conversion Rates
If you can only choose three clients and the one you’re talking to doesn’t look like any of them, stay tuned.
In my experience, most clients don’t really understand what success looks like with new technologies. Sometimes this is because the technology is new or introduces new processes, but often also because each stakeholder defines “success” differently.
Your pilot will only be successful if all major stakeholders who have signed the commercial contract agree to this. In general, they will be able to determine what a successful pilot looks like on a conceptual level, but asking them to write it down as a statistic can only lead to a cricket choir.
As difficult as it may sound, involving these stakeholders in the definition of success as a measure will remove the ambiguity after the pilot project. A great pilot is one in which everyone has the same detailed understanding of what success looks like.
Know what your pilot proves
It is generally believed that early-stage startups should focus on proving the product’s suitability in the market. This means that your pilot will end up: to prove That if you put a lot of money into it now, a lot of money will come back later.