Your Technology Is Impressive. Why Isn’t Your Round Moving?
In December 2001, Dean Kamen unveiled the Segway.
Kamen was well-established as a serious inventor with a long record in medical and mobility technology. The Segway’s self-balancing system was a breakthrough innovation. Time called it an engineering marvel. Steve Jobs said it was “as big a deal as the PC.” Respected venture capitalist John Doerr predicted Segway would be the fastest company in history to reach $1 billion in sales.
That’s the kind of endorsement founders live for.
After more than $100 million in development, Segway built out a 77,000-square-foot factory. Kamen expected institutions like postal services, police departments, airports, companies and cities to buy in volume.
Then the market cast its vote.
The early bulk orders did not come. FedEx said no. Other institutions hesitated. One of Segway’s largest early customers, Disney, ordered four dozen units. When consumers could finally buy one on Amazon, the price was almost $5,000.
The technology worked. The patents were real. The investors were serious.
But the most important question was embarrassingly simple: would enough people actually buy it, use it, and change their behavior?
That question decided the company’s fate. All the engineering superiority in the world could not save the business once the answer was no.
This week: why technical evidence, grants, and patents prove less than founders think, and how to spend your pitch on the proof that’s still missing.
Enjoy!
If you’re a science founder with an SBIR, a published paper or a patent, you probably lead with it. It feels like your strongest card, because experts have already looked at your work.
But a grant, paper, or patent only proves the specific thing it was meant to check. None of them proves customers will buy, costs will work, or the company can scale.
A grant says your technology was worth testing or developing further, not that the business has been proven.
A paper says your result held up under the conditions you tested.
A patent says specific claims were reviewed. Provisional patents don’t even say that.
Sabrina Howell studied Department of Energy SBIR applicants, comparing companies ranked just above and just below the funding cutoff. Winning an early award roughly doubled a company’s chances of later raising venture capital.
But the award’s value as a stamp of quality was not the likely explanation for this result.
What appeared to matter was that the grant helped reduce product risk by paying for a prototype. Investors responded to the derisking, not the logo.
What about science startups that pass expert review? Among NSF SBIR Phase II projects that were later shut down, insufficient market demand was cited more often than technical failure or difficulties as a reason for discontinuing the project.
The Unlock
Stop using scientific proof to answer commercial questions.
Give the science its place, then make the raise about the path to the real business.
Your scientific result may be true and necessary but it’s still insufficient.
It may be true only on a small lab sample, not at full size.
It may work under controlled conditions, not in a customer’s facility.
It may work technically, but not at the cost, yield, reliability, regulatory burden, or in the buying process the market requires.
That’s the gap investors are probing for: why they should believe your product will take in the market, make money and win.
Don’t spend precious investor time proving that smart people looked at your science. Just give the headline on what prior credentials proved.
Focus instead on the open questions that will decide the business: cost, scale, adoption, regulation, buying process, or the next technical proof.
The Capital Playbook
So how do you decide what proof belongs in the raise?
Start with the sale, then work backwards.
What are the things that have to fall in place before a customer can buy?
the product works outside the lab
it works at the size or scale the customer needs
it can be made at a cost the market can bear
it fits the customer’s workflow
the safety, regulatory, reimbursement, or procurement path is clear
the buyer has budget and authority
the customer has a reason to switch from what they use today
Choose the next proof towards the sale.
Your next proof is the domino that must happen first, will take the longest, or could tank the whole business if it doesn’t work. If the next step is a paid pilot, identify whether the blocker is the budget, workflow fit, safety review, procurement, or proving the result in the customer’s setting. If the next step is scale-up, ask if the blocker is the yield, reliability, cost, supply chain, or manufacturing repeatability.
Make the raise pay for that proof.
Your raise should not just “extend runway.” It should answer the blocking question that moves you closer to the paying customer, e.g., larger prototype, field result, regulatory answer, integration proof, or cost target. Show the investor specifically what the money buys and what you expect to have in hand when it is spent.
The One Thing
Before your next investor conversation:
Start with the sale. What has to be true before a customer can buy?
Map the dominos that have to fall: performance outside the lab, scale, cost, workflow fit, safety, regulation, reimbursement, procurement, budget, or switching behavior.
Identify the domino that must happen first, will take the longest, or could tank the business if it fails.
Clarify what proof you already have for that domino, and where that proof stops.
Complete this sentence: “This raise will prove ______, by doing ______, for $______, by ______.”
If past validation takes more time than the next proof, rebalance the pitch.
What business proof are you sacrificing by rehashing the science?
Build wisely!