“There’s a lot of great technology out there,” says Miles Kirby.”But there is still a valley of death in terms of how you build a business around it.”
These days, we don’t hear quite so much about U.K. tech businesses perishing in the so-called valley of death, a funding desert that lies somewhere between very early stage seed finance and later funding rounds. That’s partly because the funding ecosystem has improved significantly both in Britain and Europe over the past five or ten years.
But despite investment in the U.K. tech sector continuing to rise year-on-year – even in the face of the Covid pandemic—good or even cutting edge technology may not be enough to secure funding at Series A or beyond. Investors want to see tactics, strategies, and business plans that have the potential to scale. For many founders, getting the business plan right can prove as big a challenge as developing and proving their technologies.
This may be particularly true in those areas of the innovation economy that are not just technology enabled but technology-led. An entrepreneur with a plan to start a marketplace, could well start with the business plan first and then buy in or develop the software around it. In contrast, a software engineer (maybe a graduate student) could start with lab research into A.I. and/or machine learning and then set about developing a commercial plan. So the balance of skills is subtly or significantly different. Much of the expertise is on the software side.
All of which brings us back to Miles Kirby. He is CEO of Deeptech Labs, an accelerator based in Cambridge. Backed by ARM, Cambridge Innovation Capital, Martlet Capital, and the University of Cambridge, the venture aims to help fledgling businesses in the sector ready themselves for Series A investment. “We take them from Seed to Series A,” says Kirby.
It would be wrong to suggest that the startups comprising the first cohort are offering technologies in search of a use case. In fact, all the businesses have have identified or and/or secured customers and offer sector-specific solutions.
For instance, Autofill is applying A.I. to vehicle inspection reports. BKwai and Contilio are aiming their solutions at the construction industry. Circuit Mind offers an intelligent platform to underpin the creation of circuit boards. In other words, these are companies that have a clear focus on their respective markets and they’ve been selected on that basis.
Something To Learn
So what does Deeptech Labs offer, apart from a £350,000 investment into each participant.
Kirby says the accelerator has been looking for “great entrepreneurs” who nonetheless recognize that they have something to learn. “Some CEOs feel they already know all the answers—that’s fine—but they are probably not right for the program,” he says.
As Kirby explains, members of the cohort will have access to expertise and insights from technology leaders who have already scaled up their businesses. “And we’ll be looking at the big issues that companies face,” he adds. “IP, managing data, scaling up.”
Essentially, the 13-week program is divided up into three sections. In the first three weeks, the focus will be on strategic issues. “What do you want the company to look like? How do you stand out? What do you want to look like for Series A? And what are the metrics and milestones?” says Kirby.
In the middle section, accelerator concentrates on business models and going to market. For the last few weeks, the businesses are coached, on operational excellence, data management and intellectual property issues.” All this, of course, leads to the demo day.
Deeptech Labs has gone public with the first cohort well underway. With that in mind, I ask Kirby what the program has so far delivered for participating companies. “What we’re seeing is a maturity of thinking in terms of long-term strategy. The entrepreneurs have a clearer idea of what they want to do.” This in turn has made them more prepared for Series A.
Looking forward, the plan is to give every cohort a slightly different theme. The first has concentrated on A.I. and machine learning. Next time round—in addition to A.I. and M.L. there will be a greentech element. “Other cohorts may be more hardware-centric,” Kirby adds.
With Cambridge Innovation Capital, Martlet Investments, ARM and Cambridge University itself providing active support, Kirby hopes the accelerator will become a powerful component in Britain’s deeptech ecosystem. “We are hoping these companies can scale,” he says.