From idea to IPO · Stage 02
Funding Deep-Tech: What Investors Really Underwrite
Investors in technology companies, in hardware, software and cyber alike, do not buy a technology. They buy a credible plan to retire risk, step by step, with the capital they provide.
Every technology company raises against risk, but the risks differ. In hardware and deep-tech, the path is longer and the capital needs are higher. In software and cyber, the questions focus on revenue quality, scalability and trust. In all of them, a large part of the risk lies in execution. Investors know this, and the best-prepared companies address it before they are asked.
What investors are really assessing
Every investor looks at the team, the market and the technology. In deep-tech, they look just as closely at execution risk: can this team turn a prototype into a product that can be produced, certified and sold at a margin, on a timeline the capital can support?
This is where many strong technical teams lose credibility. A great demonstration paired with a vague manufacturing plan raises the question investors care about most: how much more money will this really take?
Risk-based milestones
The most convincing use-of-funds plans are built around risks, not activities. Each funding stage should retire a defined set of risks, technical, market and operational, and reach a milestone that justifies the next round at a higher valuation.
- Name the top risks explicitly, and show which milestone retires each one.
- Link milestones to evidence an outsider can verify: test results, pilot customers, yield data, supplier commitments.
- Include the costs teams most often underestimate: certification, tooling, test equipment, pilot production and working capital.
Preparing for due diligence
Due diligence in technology companies goes beyond financials and intellectual property. Increasingly, investors examine manufacturing readiness, supply chain dependence, quality systems and the realism of cost and schedule assumptions.
- An organized data room: technical documentation, test reports, IP, key contracts and the operating plan.
- A manufacturing readiness assessment, using a recognized framework such as manufacturing readiness levels (MRL).
- A clear view of single-source components, long lead times and export-control constraints.
- A cost model that connects today’s prototype cost to the target production cost, step by step.
The story behind the numbers
A strong investor narrative connects three things: a real customer problem, a technology advantage that is hard to copy, and a credible path to production and scale. Each claim should be supported by evidence, and each risk should be acknowledged with a plan.
Investors are not looking for a company without risk. They are looking for a team that sees its risks clearly and manages them deliberately.
Hardware, software and cyber: what changes at this stage
The stage is the same for every technology company. What it demands is not.
- Hardware: capital intensity, manufacturing readiness and the cost of tooling, certification and pilot production.
- Software: the quality of revenue, customer retention, sales efficiency and an architecture that can scale without a rewrite.
- Cyber: credibility with security buyers, references from security teams, long enterprise sales cycles, and the company’s own security posture, which investors increasingly test in due diligence.
Common traps at this stage
- Raising on the strength of a demonstration, without a production plan.
- Underestimating the time and cost of certification and qualification.
- Presenting a schedule with no buffer for test failures and redesigns.
- Hiding risks that investors will find in due diligence anyway.
Questions for the leadership team
- Which risks will this round retire, and how will we prove it?
- What will an operational due diligence reveal about our manufacturing readiness?
- If the next round is six months late, what happens to the plan?
This stage is part of how we work with companies end to end. See the full journey from idea to IPO, or talk to us about where your company stands.
This guide reflects the author’s professional opinion only. It is general information, not professional advice or a recommendation to take any action, and any use of it is the reader’s sole responsibility.