Last summer, I joined Cottonwood Technology Fund as a Principal. Cottonwood is an early-stage hard tech investor, backing scientific breakthroughs out of research labs and academic institutions on both sides of the Atlantic. Since stepping into this role, I’ve gained deeper insights into the dynamics of hard tech compared to traditional tech.
The differences are big: the timelines are longer, the products more complex, and assembling the right team is no easy feat. In (traditional) tech, I’ve always leveraged frameworks like the Lean Startup methodology or the Business Model Canvas to help me quickly assess a company’s current stage and state. For hard tech, while some early studies have emerged, such as the Deep Tech Hardware Napkin by First Momentum, Hello Tomorrow’s Deep Tech Decoded, and Armilar’s take on Deep Tech investing, I’ve found a noticeable gap between tech and hard tech. What’s missing is a comprehensive framework that maps out both the stage and state of hard tech startups in an integral way.
This series of blogs is my attempt to fill that gap. By combining known elements, such as team, product, market & funding, and other factors specific to hard tech, I aim to provide a complete lens through which we can assess the progress and challenges of hard tech startups.
Why hard tech is different
Hard tech startups don’t follow the same playbook as SaaS or consumer tech startups. Here’s why:
Timelines. Hard tech requires extended R&D phases, sometimes taking years or even decades to reach commercial viability. Some of Cottonwood’s portfolio companies didn’t have revenues for eight (!) years before getting to market.
Complexity. The technologies are usually disruptive, combining fields like photonics, quantum, physics, and chemistry.
Talent. Finding individuals with the technological know-how and an entrepreneurial mindset is significantly more challenging. Do you need seasoned executives in the field of quantum or space? Think again.
Market education. Some innovations are so far off the curve that industries need time to grasp the possibilities of the new technology and adopt these innovations.
Capital intensity. These ventures require substantial upfront investments for equipment, infrastructure, and extended development cycles.
These unique characteristics demand a framework tailored specifically to the needs and realities of hard tech startups.
What this framework covers
The Cracking Hard Tech framework will explore two dimensions critical to understanding and supporting hard tech startups.
State: what does the startup currently look like? This includes:
Team: composition, expertise, and scalability of the founding team and advisors
Product: technological maturity (TRL), scalability, and defensibility
Market: validation, the need for market education, potential, and regulatory considerations
Funding: sources, milestones, and aligning long timelines
Additional hard tech specific factors: IP strategies, academic collaborations, scaling production capacity, and more.
2. Stage: Where is the startup in its journey? This spans the typical lifecycle:
Pre-seed: laying the foundation with proof-of-concept and early funding
Seed: Developing prototypes and developing market hypotheses
Early-stage: Scaling technology and entering the market
Growth stage: expanding operations and achieving market dominance
Over the coming months, I’ll dive into these topics in a series of blogs. Each blog will focus on a specific framework component, offering practical insights and examples. Look at this as a starting point, not the definitive answer. Hard tech is rapidly evolving, and I aim to start a conversation and invite collaboration. Let’s crack hard tech together!
About Cracking Hard Tech
I have found a noticeable gap between frameworks for tech and their application in hard tech. The cracking hard tech blog series is my attempt to fill that gap. By combining known elements, such as team, product, market & funding, and other factors specific to deep tech, I aim to provide a complete lens through which we can assess the progress and challenges of hard tech startups.
Over the coming months, I’ll dive into these topics in a series of blogs. Each blog will focus on a specific framework component, offering practical insights and examples. Look at this as a starting point, not the definitive answer. Hard tech is rapidly evolving, and I aim to start a conversation and invite collaboration. Let’s crack hard tech together!
About the author
I’m Ytsen, a passionate seed stage investor investing in deep tech hardware companies in Northern Europe and Southwest USA. You can find me at https://www.linkedin.com/in/ytsenvandermeer/ or contact me at ytsen@cottonwood.vc. Feel free to reach out.