Welcome to the 109th edition of Deep Tech Catalyst, the educational channel from The Scenarionist where science meets venture!
This week, I sat down with Mitch Worden, Vice President of Corporate Development – Energy at S2G Investments, to unpack what “growth-ready” really means in the energy sector—once the first proof points exist and the real work becomes scaling deployments, building operational discipline, and creating the kind of predictability that later-stage capital and strategic buyers can underwrite.
Key takeaways from the episode:
⚙️ What Growth-Ready Actually Signals
Once an energy company approaches growth, the question shifts from “does it work?” to “can it repeat?” Standardized deployments, real operating systems, and a track record of hitting milestones start to matter as much as the underlying solution.
🏢 Customer Concentration Is a Resiliency Problem
Every company starts with one customer. The risk is staying dependent on one customer—or one customer segment—especially in cyclical markets where demand can turn for reasons unrelated to performance.
📉 Cost Curves and the Path from First-of-a-Kind to Scale
First-of-a-kind is an achievement, but growth capital is about what happens next: clear buckets of efficiency gains, a believable path down the cost curve, and an active dialogue around milestones as repetition accelerates.
🧭 Scaling Under Real-World Constraints
Utilities and industrials come with long sales cycles, and many energy businesses come with long funding cycles too—especially when CapEx is heavy. Grounded planning is a core part of being investable at the growth stage.
🎯 Building Toward the Exit Before You Need It
Strategics and public markets reward predictability: durable unit economics, sticky revenue, defensibility, and a clear “build vs. buy” rationale—plus integration and culture as real variables in whether an acquisition succeeds.
BEYOND THE CONVERSATION — STRATEGIC INSIGHTS FROM THE EPISODE
What a Growth-Ready Energy Company Looks Like
A growth-ready energy company is no longer being evaluated on whether the core idea works in principle. The question becomes whether the business can scale in a way that is repeatable, disciplined, and economically defensible across real-world conditions.
By the time a company is approaching a Series B or Series C conversation, the most important shift is that the market has already started to render a verdict.
There is some evidence of adoption, some proof that the solution performs outside a controlled environment, and at least an early signal that customers will pay for it.
The work now is to show that those early wins aren’t a one-off outcome of exceptional founder effort or a uniquely favorable customer. They need to reflect a model that can hold up as volume increases.
From bespoke execution to standardized deployment
In the earliest stages, it is normal for companies to win by being highly hands-on. A first project may be custom. A first deployment may feel like a one-time build.
A product may exist as a version one that gets reshaped through real usage and iteration.
The growth-stage test is whether that early, scrappy execution has been turned into something more structured. The company needs to demonstrate that it has moved from “first-of-a-kind” delivery toward a standardized approach that can be repeated.
That standardization is not just about the product itself, but about the internal process: how deployments are executed, how projects are managed, how performance is measured, and how the organization supports delivery without reinventing the wheel each time.
That’s where scale begins to look credible. The underlying signal is that the team has learned from early work and can now repeat the process at a more efficient clip.
Proving the organization, not just the solution
At the growth stage, the focus widens from the technology to the company’s ability to operate. The question becomes: Does the organization work?
That tends to show up in very practical ways.
Are there operating systems in place?
Are there playbooks for execution?
Is there a supply chain discipline where it’s needed?
Are there clear KPIs and milestones that the team tracks—and can actually hit?
This isn’t a request for corporate bureaucracy. It’s a way to assess whether the company is building a track record of execution that can be underwritten.
In other words, whether performance is becoming predictable enough that an investor can believe the next phase will look like an extension of the last, rather than a totally new bet.
When technology risk stops being the main risk
At this stage, the appetite for pure technology risk is limited.
The expectation is that the solution has been proven in market conditions and that the remaining work is about scaling it—driving cost down, improving efficiency, and making the economics increasingly competitive against the status quo.
That does not mean the technology is “done.” It means the core technical uncertainty is no longer what a growth investor wants to be paying to resolve.
The company should be able to point to evidence that the technology is viable, that it performs reliably in the field, and that the cost curve is moving in the right direction as production, deployment, or delivery scales.
The key test is whether the company is becoming an economic solution in the marketplace. Not a promising experiment, but a product or service that can win because it is efficient and valuable enough to outperform traditional alternatives.
Customer Concentration as a Resiliency Problem
Customer concentration is one of those realities that looks harmless at the beginning and becomes structurally important as the company grows. Early on, it is almost unavoidable.
Every startup has to start with one customer, and in many markets, the first contract is the hardest one to win.
The issue is not that the business began with a narrow base. The issue is whether it stays dependent on that narrow base once the company is asking investors to underwrite a scaling plan.
At the growth stage, customer concentration stops being a simple go-to-market detail and starts to read as a resilience question.
The more the company relies on one or two customers, the more its growth trajectory can be limited by factors outside the company’s control, including a customer’s ability to expand.
Even when the relationship is strong, the business can become exposed to the limits of that single customer’s ability to expand.
The goal is to build a durable customer base that strengthens the business over time.
A diversified customer base tends to signal that the company’s value proposition travels—that the product or service can land in more than one account, across more than one environment, with a sales and delivery process that is not uniquely tailored to a single buyer.
That matters because scaling requires repetition.
If the company’s growth depends on one relationship deepening indefinitely, it becomes difficult to underwrite growth as a system rather than a hope.
This is also why the idea of a beachhead market matters.
Penetrating a beachhead is often the right early move. But growth-stage readiness shows up when the company can demonstrate that the beachhead is not a dead end.
There needs to be evidence that adoption can extend beyond the first customers, and that the business can “land and expand” in a way that is not overly dependent on one account.
Diversifying across segments to withstand cycles
In energy markets, customer diversification is not only about reducing exposure to one buyer. It is also about reducing exposure to one segment.
These markets move in cycles. Certain customer segments experience cyclical downturns, shifting demand, or macro headwinds that can slow purchasing decisions.
If the company is tied to a single segment, a downturn in that segment can effectively become a downturn in the company—regardless of how strong the product is.
A more resilient business is one that can expand into additional customer segments that are not synchronized in the same way. When one segment tightens, another may be stable or growing.
That ability to move across segments—without losing coherence or becoming scattered—adds a layer of adaptability that matters in growth underwriting.
Diversification ultimately points back to a broader way of thinking about scale: adaptability.
A growth investor is not only evaluating whether the company can execute in its current environment, but whether it can keep executing as conditions change.
Customer concentration works against that because it reduces strategic options.
A diversified base, especially across segments, gives the company more ways to continue growing even when specific customers or verticals hit friction.
And at the practical level, it ties directly to what makes scaling believable: the capacity to deliver more services into the market, support scaling economics over time, and sustain growth even when individual customers—or entire customer groups—cannot keep expanding at the pace the company needs.
Cost Curves, Techno-Economics, and the Path from First-of-a-Kind to Scale
At the growth stage, the conversation about techno-economics is less about presenting a perfect model and more about demonstrating that the team understands how costs will move as scale increases.
Once a company has reached a first-of-a-kind milestone, it has already crossed an important threshold. The remaining question is whether that first success can be repeated—and repeated in a way that becomes more efficient each time.
This is where cost curves become central.
The investor is not just underwriting the existence of a solution, but the trajectory of that solution as it moves from a single deployment to many deployments.
The point is to understand whether the business can become increasingly competitive against the status quo, and whether the path to that competitiveness is grounded in tangible operational levers rather than hope.
First-of-a-kind is a milestone, not the destination
A first-of-a-kind project is hard, and it often requires a capital structure that doesn’t map cleanly onto traditional venture assumptions.
Depending on the project and entity structure, equity may not even be the right instrument for that step.
But as a proof point, first-of-a-kind matters because it provides a base layer of evidence: the team has built something real, learned from it, and can now move into repetition.
Growth capital is typically aligned with that next phase.
The expectation is that the company can take what it learned in the first deployment and repeat the process at a faster, more efficient clip.
The underwriting logic rests on the idea that iteration will not only increase volume but also drive down costs through learning, standardization, and improved execution.
Efficiency gains
A recurring signal in growth-stage diligence is how teams talk about efficiency gains.
The teams that inspire confidence are usually not the ones with the most intricate spreadsheets, but the ones that can clearly articulate where the efficiencies will come from.
That clarity tends to show up as “buckets”—specific areas where the team expects to cut costs or increase efficiency over a defined period.
The buckets might look different depending on the nature of the business.
A software-oriented company will have a different set of levers than a Deep Tech company, and a project-based developer will talk about different constraints than an OEM.
But the underlying requirement is the same: a grounded understanding of what drives cost today and what will drive it down tomorrow.
When that understanding is present, it becomes evident in the way the roadmap is discussed.
The narrative isn’t abstract. It reflects operational reality: what changes with repetition, what changes with scale, and what changes as the organization becomes more mature in procurement, supply chain, manufacturing, or deployment.
Underwriting performance as the cost curve bends
From an investor perspective, the goal is to understand the material level of efficiency gains the company can achieve over time—and whether those gains are meaningful enough to change the economics of scaling.
This is where first-of-a-kind becomes a reference point rather than a credential.
It establishes a baseline, but the underwriting is about what happens next: the ability to improve performance, reduce costs, and demonstrate that the economics are moving in the right direction as the company scales.
The key idea is that scaling should not simply multiply the same cost structure.
The company should be showing that cost comes down as volume goes up, and that the solution becomes increasingly viable as an economic alternative in its market.
The techno-economic plan at this stage is not treated as a static artifact. It becomes part of an ongoing dialogue.
The expectation is that the team can articulate the areas where cost and efficiency improvements are likely, and then work actively with an investor to execute against those milestones.
That means maintaining constant communication, using the investor’s support where relevant, and treating the plan as something that gets refined through real-world execution.
In practice, what matters is not whether the founder arrives with an impossibly detailed model, but whether the team can explain, credibly, how efficiency will improve and what the organization will do to make that improvement happen.
The plan becomes a living roadmap, and the milestones become a shared framework for measuring whether the company is actually bending the cost curve as it scales.
Scaling Execution: Systems, Sales Cycles, and Capital Reality
Once a company is moving beyond early-stage experimentation, the question is no longer whether the team can build something impressive. The question is whether the company can operate in a way that makes growth predictable.
At this stage, the founder’s scrappiness and charisma still matter, but they are no longer sufficient on their own.
What begins to matter more is whether execution has been converted into a repeatable operating discipline.
Growth-stage investors tend to look for that shift because scaling exposes weaknesses that are easy to hide at a smaller scale.
When the company is small, a few heroic efforts can compensate for missing systems. As volume increases, the absence of operating infrastructure becomes a limiter.
The organization has to work, not just the product
A core pitfall that shows up in growth conversations is when the company is still running as if it were in the early stages.
The team may be capable, the vision may still be compelling, and early customers may be supportive—but the business has not yet demonstrated that it can run through a playbook and deliver consistently.
At scale, it becomes important to show operating systems, execution processes, supply chain discipline, and a KPI framework that ties the team’s work to clear milestones.
This is not about signaling maturity in the abstract. It is about building a track record of success that makes future performance easier to underwrite.
In practical terms, the company needs to demonstrate that it can repeatedly meet targets, that the internal machine is functioning, and that the business is being run with enough rigor to support rapid growth.
Long sales cycles
Energy markets often involve customers like utilities and industrial companies. These end markets can be slow and process-heavy.
Sales cycles are long, and the path from initial interest to deployment can stretch far beyond what founders expect when they are used to faster-moving startup dynamics.
One of the most important signs of readiness is whether the executive team is grounded in that reality.
A company that treats long sales cycles as a temporary inconvenience tends to get caught off guard. A company that treats them as the environment can build around them.
That mindset shows up in the way the team navigates the cycle: how it moves through procurement, how it manages stakeholder alignment inside the customer organization, and how it works to shorten timelines where possible.
The question is not whether the cycle is long, but whether the company understands what it takes to move through it, and whether it has a credible approach to improving velocity over time.
The funding cycle can be just as long
A second pitfall is failing to match capital planning to the reality of the business model. Many of the companies operating in these markets are capital-intensive.
CapEx-heavy models carry different demands than software businesses, and the consequences of misjudging capital needs can be severe.
Growth-stage readiness includes realism about how much capital the company needs, what future funding is likely to look like, and how the organization can weather periods where capital is slower to come in than expected.
This is not only about avoiding under-raising. It is about demonstrating a clear view of the financing path and the operational implications of that path.
When founders and executive teams show that they are grounded in both the sales cycle and the funding cycle—and can plan accordingly—it changes the confidence level a growth investor can have in partnering with them.
It signals that the company is not merely building technology, but building a business that can survive and scale within the actual constraints of its market.
Building Toward the Exit Before You Need It
By the time a company is raising growth capital, the exit is no longer an abstract concept.
It may still be years away, but it becomes closer in a meaningful sense because the company is now being evaluated on whether it can mature into something a strategic acquirer or the public markets can rely on.
That changes what matters.
The defining theme is predictability. Whether the destination is an IPO, an acquisition, or a later-stage capital handoff to infrastructure-oriented investors, the business has to demonstrate that its results can be repeated at scale and that the performance of the model is durable enough to persist through a transition.
Repeatability is the foundation of predictability
A company becomes attractive to buyers and public investors when it can show that it can do the same thing not just a handful of times, but at a much larger frequency and volume.
This is a different mindset than early-stage proving.
The questions become:
Can the company produce the same outcome ten times, a hundred times, or a thousand times?
Can it execute repeatable deployments if it is project-based?
Can it deliver stable unit economics if it is product- or service-based?
Can it illustrate, through real results, that its growth is not fragile?
This is where internal discipline and standardization connect directly to exit readiness.
The more consistent the company’s execution becomes, the more a future buyer can treat performance as something they can underwrite rather than something they have to gamble on.
Durable customer relationships and “sticky” revenue
Strategic acquirers and public markets both care deeply about whether revenue will survive a change in ownership or operating environment. It is not enough to show fast growth.
The business needs to show that its customer relationships and contracts are durable, that customers continue to renew or buy more, and that revenue is sticky enough to persist.
That durability also links to the acquisition logic around accretion.
If a strategic buyer is acquiring the company, they want the business to be immediately accretive, which means the revenues and margins need to be real and maintainable.
The buyer is not only purchasing innovation; they are purchasing a working engine they can integrate.
This is also why margin improvement over time matters.
A track record of gross margin expansion signals that the business is scaling efficiently and that profitability dynamics can improve as the company grows.
That kind of trajectory supports the idea that the business will continue performing after an acquisition or after entering public markets.
What scale tends to look like for strategics
The thresholds that matter vary depending on the business type and the segment.
A project developer building renewable assets will be judged differently from a company providing a new energy source—and differently again from a business selling equipment, infrastructure, or industrial services.
In asset development, the quality of the assets and the strength of the pipeline become central.
Scale is not only measured in megawatts deployed, but in the credibility of what is coming next—how advanced the pipeline is, whether projects are at notice to proceed, and the strength of the underlying agreements that support execution.
In businesses that are fundamentally about producing energy at a competitive price, levelized cost becomes a core reference point.
The company needs to show that it can approach cost competitiveness, and ideally that the market views the product as something that delivers equal or higher quality at a similar marginal cost.
That’s the point where adoption begins to look like market pull, where you’re not relying primarily on a green premium but showing you’re economically competitive.
Across models, revenue scale is another gating factor.
Buyers tend to have minimum expectations for revenue magnitude, and while it varies by industry, the idea is that the company has proven enough commercial traction to matter.
Alongside revenue, buyers want to see that margins are robust and defensible over time.
“Build or buy” and the strategic value of being already in-market
A frequent strategic question is whether a large incumbent should build a capability internally or acquire it.
Many strategics have deep technical teams and significant R&D capacity. They are often capable of developing solutions on their own.
The acquisition rationale tends to come down to time and leverage.
If a company is already in-market, already serving a critical customer base, and already expanding the services that customers rely on, it can represent a faster path to strategic positioning than internal development.
This is where positioning becomes important for founders.
The more a company can show that it is serving a customer segment that is strategically important, that it expands the acquirer’s service set, and that it strengthens the acquirer’s customer relationships, the clearer the “buy” case becomes.
The story shifts from innovation as novelty to innovation as leverage.
Integration, defensibility, and culture
In acquisition conversations, there is rarely a single decisive factor.
The company needs a defensible technology set—patents or other protections that differentiate it from competitors.
It needs a defensible business model that proves it can deploy at scale, not merely demonstrate technical promise.
It needs to show that it can integrate into existing sales channels and operating structures as an additive solution, strengthening customer relationships and expanding what the acquirer can offer.
And culture matters more than founders often expect.
The history of mergers and acquisitions is full of failures driven by integration friction.
Being able to show cultural fit—an ability to “slot in” without breaking the way the acquirer operates—can materially influence whether an acquisition is perceived as seamless or risky.
Exit readiness, in that sense, is built years in advance.
It is shaped by how the business runs processes, how it builds repeatability, how it earns customer trust, and how it demonstrates that it can keep delivering performance even when ownership changes.
