Deep Tech is one of the most promising segments of venture capital, according to a recent report, The European Deep Tech Report 2023 from Dealroom. Much of what humanity uses today, from electricity and smartphones to cars, was once considered Deep Tech. Aleksei Skorik, the founder and CEO of Nanga Agency, explains the immense value for PR-managers working with such projects and how best to manage campaigns.
Life is always more diverse than any set of rules so for some people some recommendations work, for others they do not. This thesis perfectly illustrates the fact that not all Deep Tech projects live for years on investor money. Some may be able to reach operating profit fairly quickly and even forgo additional dilution of the funder’s share if there is no need to continually fund R&D and there are no plans to exit the project.
However, in the vast majority of cases Deep Tech is about constant investment on new hypotheses, refinements, increasing production for a healthy cost structure, expansion and team growth. Here the PR-specialist must understand if the project depends on external funding, no matter what tasks it faces today, investment PR will be a red thread through each of them.
The venture model assumes that the investors in the project make money either on the company’s IPO or on its sale to a strategist. The option when a portfolio company simply generates some kind of profit is viewed by venture funds as not very successful, because it is not clear how to get out of such a business. Yes, dividends come on the shares, but the fund will not distribute those shares to its investors. Its job is to further sell the shares, for example, to a fund at a later stage and return 3x, 5x, 10x, etc. of the investment. This is possible when selling either the entire company, or the investor’s share to secondary investors, or an IPO, which is essentially a private example of selling to an unlimited number of people.
The PR person needs to know this, because often Deep Tech startup founders from the very beginning are focused on exit after a certain period of time. And even if today the PR manager’s task is to show the product the focus should be on investment PR.
Adjust the strategy accordingly:
If you do not keep this in mind, the tactical PR coverage may in the long run have a negative impact on the company’s capitalization. Or it could lead to reputational damage at the time of fundraising if external communications for instance don’t take into account the geographical region of the future investor and the cultural context. For example, active newsjacking on acute social topics may well have a negative impact on communications for conservative foundations in the Middle East.
One of the problems faced by technology PR specialists is the difficulty of verifying the technology, and with it the expertise of the team. Multidisciplinary PR agencies have it harder: in fact, they only have a couple of setup calls or meetings to decide if they are ready to get involved and take responsibility for what they bring to the outside. In Deep Tech’s case, how do you even evaluate a product that doesn’t exist or is so complex that it seems beyond understanding unless you have a PhD in applied science.
For instance, AI platforms can turn out to be offices where regular employees work in strict secrecy, big data may be just a small sample of data, and the drones in the video can just roll down the slide.
Of course the share of scams today is not comparable to crypto projects that attracted investments on ICOs a few years ago but they still occur. So what can you do to reduce your own risks? We sign an NDA and start our own equivalent of tech due diligence:
It may seem we are digging too deep. But this is how we work with deep technology. For instance you have to be prepared for the fact that the potential project may have been inspired by the early success of ScaleFactor, which for six years passed off Filipino accountants as artificial intelligence.
In a typical situation the founder of a classic technology startup approaches a PR specialist with an inquiry. A classic situation is one in which the mooted product is not based on knowledge-intensive developments and there is no need to work on R&D for many years. The project is at the MVP stage, but the head of the company wants to start promoting it as soon as possible so that he can attract clients and investors. The belief is that money will flow in and all the right audiences will immediately form a queue for the product.
If the PR person has been working in the venture capital market for a long time, he understands that it is too early to move on to promotion: the product is raw and a potential pivot is just around the corner. In general, this is quite normal for a company at the MVP stage. But it is extremely harmful and premature to enter the market at this point. Either the specialist honestly says that it is better to wait to move forward with PR or he sings a song about warming up the market and earns some money.
If you remember the methodology for determining the level of technology readiness (TRL, see Figure 1), even starting media promotion at TRL-8 is a little early. The right moment to launch is when beta-testing is completed, and the business model is refined
Fig.1, Source: NASA
Now all of this said the irony is that these admonitions could be redundant when it comes to the Deep Tech sector.
You can start media communication in Deep Tech long before the MVP and even at the experimental stage. For instance, TRL 3-4 is the perfect time to start trumpeting the team’s successes. The reason is that Deep Tech projects are designed to solve problems that are so global the earlier the company starts interacting with its target audiences the better. If we remember Rogers’ model of innovation diffusion, the recommendation would be as follows: focus not on innovators (see Fig. 2) – there will be no problem with them, but on the later majority and the laggards.
Figure 2, Source: Jurgen Appelo, Flickr
During the lab prototype and demo stages, the PR specialist, and in scientific communications the Public Information Officer, and his team must work like a small factory. Stories need to be told to different target audiences, of course taking into account different tone-of-voice, vocabulary and key meanings. Regulators care about one thing, business about another, investors about revenues and the general public about usage. You have to keep everyone in mind. The more credibility a project achieves by the time the product is released the easier it will be to organize pilots and set up further distribution.
