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Unlike software, where iteration is fast and cost-effective, deep tech startups must navigate industrial-scale production, complex supply chains, and billion-dollar infrastructure commitments. The moment a company moves beyond the lab, the risk profile shifts.
Most deep tech startups hit a brutal scaling bottleneck—a moment where technology readiness alone isn’t enough, and the difference between success and failure comes down to strategy, financing structure, and execution precision.
In this Venture Guide, Phil Morle, Partner at Main Sequence Ventures, shares practical tactics and strategies to support industrial startups as they scale successfully.
What You’ll Learn in This Edition
CapEx-Heavy or Asset-Light? – How to structure your business model for scalable growth while managing capital intensity.
Scaling Readiness: Why Early Commercial Traction Is No Longer Optional – The new investor standard for funding Deep Tech beyond the lab.
Funding Beyond Equity: Designing a Capital Stack for Sustainable Growth – How to blend venture capital, non-dilutive funding, and infrastructure financing.
Avoiding the ‘Valley of Death’ in Deep Tech Scaling – The critical financial and operational pitfalls that derail startups before commercialization.
Mapping the Path to Liquidity – Designing compelling exit strategies for long-term value creation.
Deep tech companies require massive capital investment, careful techno-economic validation, and a clear funding strategy from day one. Whether you're a founder, operator, or investor, understanding the right scale-up path—balancing venture capital, non-dilutive funding, and project financing—is critical to success.
If you’re just joining us, The Scenarionist Venture Guides are part of an exclusive series on venture strategy for deep tech founders and investors—offering insights from leading deep tech VCs, founders, and operators.
Here’s what you’ve missed in previous editions:
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LESSONS LEARNED
Scaling Deep Tech or SaaS: What’s the Difference?
Scaling a Deep Tech company presents a fundamentally different set of challenges compared to scaling a software-based startup. While software companies focus on refining their codebase, expanding their teams, and driving customer acquisition, Deep Tech startups often face an entirely different landscape—one marked by high capital expenditures (CapEx), limited early-stage customers, and the need for large-scale physical infrastructure.
For venture capitalists (VCs) and founders, one of the most critical early questions in Deep Tech is determining whether a company will be CapEx light or CapEx heavy. In software, the preference is almost always for asset-light models, where infrastructure costs remain minimal. However, in Deep Tech, significant investment in physical assets is often unavoidable.
CapEx Realities in Deep Tech
A Deep Tech company—whether in quantum computing, bio-industrial engineering, energy storage, or aerospace—requires the manufacturing of physical products, which brings two primary business model choices:
