Mastering Go To Market for Early-Stage Deep Tech Startups: Part 1
Every startup is unique, as is its Go-To-Market (GTM) strategy — from the initial blueprint to execution. Several factors shape the early decisions an entrepreneur makes about scaling revenue, especially for deep tech startups, which often require tailored market entry strategies, strategic alliances, a deep understanding of the value chain, or even new business models.
After thousands of meetings with early-stage entrepreneurs, we at Elaia have observed a few recurring patterns among successful GTM approaches. With this in mind, we wanted to share some recommended (and by no means exhaustive) principles for building an effective GTM strategy for early-stage deep tech startups. Elaia has built a strong track record in this domain, investing in startups across the Future of Computing (GenAI, Cloud & Infra, Semiconductors, Photonics), Climate Tech, and the Future of Health (spanning Biotech to Techbio), while supporting various business models through companies like Alice & Bob, AQEMIA, Ncodin, Moments Lab or Giskard.
In this article, we’ll offer our perspective as deep tech investors on GTM strategies for entrepreneurs, highlight emerging trends, and outline the key metrics we focus on when evaluating startups at different stages. Divided in two parts, part two will explore how attracting the right business talent can complement a deep tech team and help achieve crucial GTM milestones, illustrated through specific case studies.
Originally presented at a workshop for founders at Deep Tech Momentum 2024 in Berlin, consider this piece a strategic roadmap rather than a checklist — an introduction to sharing our insights and experiences in this space.
For a different angle, check out our CPO-focused article focused on the Chief Product Officer’s role in defining a tech-intensive startup’s product vision and strategy.
Let’s dive in!
A GTM strategy involves the comprehensive set of processes, methodologies, and execution plans that enable a company to effectively bring a product to market and generate revenue. It encompasses every step, from establishing product-market fit to defining the Ideal Customer Profile (ICP), determining the business model, setting pricing strategies, creating the sales motion and process, forming partnerships, selecting distribution channels, planning geographical expansion, and more.
Let’s share some common pitfalls we observe in early-stage deep tech startups (which are not always easy to avoid!):
Deep tech startups often place a strong emphasis on technology and product development, driven by a passion for innovation. However, this focus can be misaligned if there is a lack of deep understanding of what customers and the market truly want and need. It is crucial to ensure that the value proposition of the problem being addressed is clearly defined and resonates with the target audience, and at minimum since the pre-seed to be able to articulate the tangible value creation that the innovation will generate.
In many cases, the market may not yet be aware of the need for breakthrough technologies. Deep tech startups aim to solve problems that are inherently complex and often lack existing solutions — they are designed to be disruptive. As a result, preparing the market for such innovations should never be an afterthought. Market education, strategic product positioning, and establishing partnerships with industry leaders are essential steps to bridge this gap and accelerate adoption.
Deep tech startups aim to solve problems that are inherently complex and often lack existing solutions — they are designed to be disruptive. As a result, preparing the market for such innovations should never be an afterthought.
A robust GTM strategy covers a wide array of critical elements, including customer discovery, achieving product-market fit (PMF), defining the ICP, setting the average selling price (ASP), developing a sales playbook, building a sales team, managing distribution channels, and nurturing a community around the product. It’s never too early to start thinking about these strategic aspects, even if the details and solutions will evolve over time.
Through approaching the sales and GTM process with as much rigor as the tech product development process, the founders will maximize the chances of being successful. By also building a team or system of advisors that is balanced between business and tech, these issues are less likely to arise and you can maximise your chance to scale the company quickly.
Investigated by Thomas Ritter and Carsten Lund Pedersen in their seminal Harvard Business Review piece, An Entrepreneur’s Guide to Surviving the “Death Valley Curve”, the death valley curve refers to the crucial initial phase of new ventures, “when substantial work on a new enterprise has begun but no sufficient revenue has been generated. During this period, companies deplete their initial capital in their quest to establish the business.” This curve is perilous for all startups, but most especially for B2B deep tech companies where translating cutting-edge technology into a sellable product can be time- and capital-intensive. Typically, this occurs in the critical phase between Seed & Series A funding for pure software companies, and potentially a bit later for pure hardware startups, with revenue being replaced by other GTM KPIs. But all has to be prepared since day 1, meaning as the other KPIs (tech, product, team..), GTM KPIs are critical in your data package to continue your equity story, even in a pure hardware startup.
The below graph, adapted from a first version by Octopus Ventures published in 2022, showcases the expectations we have across three key sectors we focus on at Elaia: deep tech software, hardware (applied tech or a mix of hardware and software), and pure hardware (foundational technologies). For the sake of this article, we’ve excluded biotech and techbio as GTM and its associated KPIs are slightly different — more to come on that front! Also a very industrial startup might have slightly different KPIs, as the launch of manufacturing include great synchronization with filling your customers pipeline.
As shown in the graph, it’s clear that there is no one-size-fits-all approach to GTM strategy for deep tech startups. GTM and its associated KPIs vary significantly depending on the unique characteristics of each venture. The key is to establish early alignment around Series A expectations, which will help define where to focus your efforts. Below, we outline some general expectations that VCs typically evaluate during both the investment and post-investment phases. Again, each VC has its own way to look at it, so this is not an exact science: but the key is to take lots of time at the beginning of the journey to discuss your KPIs with your seed investors and more importantly with Series A investors in the market.
We frequently see startups progressing to the Series A stage without having established these key KPIs, which can be a major factor in their failure to secure funding. This is why mastering the GTM framework during the pre-seed and seed stages is critical. As outlined above, the three primary focus areas include PMF, customers and sales, and finally, the team.
For example, in the case of a deep tech SaaS company, by the time it reaches Series A, PMF should be clearly validated with strong market demand. In the sales category, there should be repeatable sales motion in place, a clearly defined vertical market, and a structured pricing model. On the team front, the company should have a VP Sales in place, along with the foundations of a growing sales team.
What does this mean for early-stage deep tech startups? It underscores the importance of building a robust GTM strategy from Day 1.
As we’ve outlined the typical GTM KPIs that VCs expect to see at the Series A stage, it’s important to recognize that VCs will also evaluate a few foundational elements of a GTM strategy at earlier stages to ensure the startup is on the right path. During the first months and year of your company, actively seek feedback and insights from experienced professionals to understand which KPIs are most relevant and typically analyzed.
For deep tech startups, however, VCs will place significant emphasis on factors unique to this sector, such as intellectual property (IP) and high barriers to entry. Given the critical role these elements play in a deep tech startup’s long-term success, VCs may sometimes prioritize strong, defensible IP over more developed GTM KPIs, but both are absolutely critical for the future success of the company.
For deep tech startups, however, VCs will place significant emphasis on factors unique to this sector, such as intellectual property (IP) and high barriers to entry.
The chart below illustrates a typical GTM roadmap for deep tech startups, highlighting key KPIs that we at Elaia focus on at each stage of the funding journey. Remember, each startup is distinct, especially in the deep tech space, and your early-stage investor is there to support you throughout this journey.
Example of path from a GTM focus from Pre-Seed to Series A for a deep tech startup with complex technology development (for example HW including IP plus SW or foundational HW)
As illustrated in the visual, a robust GTM strategy integrates key KPIs from the very early stages, making it challenging to reach a Series A funding round without demonstrating significant traction. This is intentional: by the time a startup reaches a seed milestone, substantial progress should have been made in customer discovery, and the foundation for achieving PMF should be firmly established.
While we provide recommendations on what each stage might entail, it’s crucial for deep tech startups to have the right business expertise in place as they build out these essential elements, both internally, at board level and externally. Stay tuned for part two of our GTM series, where we explore this topic further along with real-world case studies!