If you provide grants, investment or incubation services to early-stage science-based ventures then read on – this is a big deal.
Or it used to be! Check out the updated version of this article with better video content https://www.linkedin.com/pulse/deeptech-seed-fund-scorecard-objective-data-measuring-pearse-coyle
We’ve created a method for pre-revenue science-based ventures to objectively present to investors and grant providers the key metrics associated with their ventures, removing all of the noise and any cryptic science stuff. This allows the really promising ventures to stand out, it also eliminates the hopelessly weak ones.
The scorecard is here
We aim to build a community of incubators, VCs and government funders who will use this scorecard and will help it to evolve.
Background
Right now it is critical for the planet that the really great science is spun out from the lab and successfully turned into successful ventures (spinouts) that go on to raise the level of funding required to allow them to have great impact.
For investors and grant funders it is really hard to figure out which ventures to give money to. Some of the really large new funds – particularly in climate science – struggle to optimally allocate the funds available to them.
This fund-allocation problem is an important problem for humanity to solve. In cooperation with a number of deeptech incubators, government funders and globally-focussed late-stage VCs, we have devised the DeeptechSeed Fund Scorecard which is intended to be used by science-based ventures to objectively present the key facts about the venture for which they are seeking grants and/or initial investment. We’re making it available for anyone to use and we want it to evolve as lessons are learned from using it.
This is designed for business to business (B2B) science-based ventures that are pre-revenue and pre-investment. Our goal is to make this group discoverable earlier bymajor investors by giving them some useful standardised metrics.
Launch
After a pilot programme last year with two of their cohorts of ventures, the Innovate UK ICURe programme has adopted this scorecard. Last month we rolled it out to a new cohort of theirs and to a new cohort of the Deeptech Founders programme in Paris, France.
0:00 In this video, recorded at Deeptech Founders, Pearse Coyle introduces the scorecard and explains the rationale behind it. (Make sure to play it in HD)
He explains the three main sections of it:
11:55 Traction and Market: Which allows the venture to present the evidence of traction and evidence of market size.
The aim here is to get past the PowerPoint BS, with logos of interested potential customers, and instead show how many early-adopters are in some way committed, in what way are they actually committed and how many of them will take a due-diligence call from an investor.
26:29 Team IP and cap table: Where the proposed ownership structure and IP licensing terms can be summarised.
Sometimes investors have to ask a lot of hard questions before the information sought on this sheet is provided. In particular, what we usually want to know is, after the university and after the tenured academics what % equity is available to the full-time founding team.
This sheet also allows for a simple summary of the terms of the Intellectual Property licensing deal (between the university and the venture) to be provided.
49:02 Funding ask: This shows the funds required broken down in a way that makes clear to investors and to grant funders who is expected to be funding the venture and to what level. In particular this highlights:
– The total amount of money sought, not just the amount sought from investors.
– The amount of money coming from early-adopters or collaborators. If this is zero then you have a credibility problem.
– The amount already committed, or offered by “follower” investors. E.g. many universities have seed funds that will pretty-much-automatically invest (follow) once you have a committed (lead) investor.
– The amount you expect to win in grants. It is really attractive for investors if you have loads of non-dilutive, “free”, money also coming in. Sometimes ventures just say that they need e.g. €300k from investors but they don’t make it clear that from all sources they might then have as much as €1M available to them.
Call to action
– Go ahead and use this scorecard if you’re running a deeptech incubator or a very early-stage investor. Just let me know how you get on Pearse Coyle pc@deeptechseedfund.com
– If you want our help and might need a co-investor or a lead investor then we’ll help you use it
– If you’re a grant provider or are running an awards competition then talk to us. We believe this is an ideal way to objectively assess applicants.
Additional links/materials
Early-adopter template proposal https://bit.ly/earlyadopterproposal
Presentation on how and why to get paying early-adopters https://bit.ly/deeptechearlyadopter
This post was originally posted on LinkedIn by Pearse Coyle. You can view the original post here and follow Pearse on LinkedIn here