Life of a startup

With all the hype that is going on about startups, investments and tech giants, someone might ask: what is a startup? 

From the outside, startups may all look the same. A group of young companies working to build a product and/or launch a product in the market to solve a specific problem. 

The hard truth is that, although the definition above rings true to some extent, there is such an incredible degree of variety in the startup world. People who are interested in joining the startup world should keep in mind that, like a Tardis, it's way bigger once you’re on the inside. 

If you're looking for a new opportunity, understanding the different types of startups and their stages is going to make all the difference when it comes to finding what you're looking for. 

First of all, let's begin with the distinction between tech and deep tech companies. 

Tech vs deep tech

In today's world, a tech startup is usually defined as an ICT (Information and Communications Technology) company where the main challenge to bring a product to market is linked to the market itself, rather than the technology. 

To understand what it means, let's start by saying that this definition applies today but it has not always been true. In fact, during the 90s, the arrival of the internet gave many entrepreneurs the opportunity to create completely new ICT-based solutions, that had an intrinsic technical challenge, because the industry was still nascent. 

After more than 2 decades of innovation, the technical complexity of creating an ICT company is far lower than before. This is why the main challenge a new company faces is to enter the market, which could be boiled down to building products users want and acquiring more users over time. 

On the other hand, a deep tech company has a novel technology at its core and the associated technical challenges are as important as entering into the market, if not more. Usually, deep tech companies start with a scientific or technological discovery made by scientists and engineers in the lab, where some inventors see a potential path to commercialization. These companies span many fields, from life sciences, medical technology, clean technology, renewable energy, artificial intelligence and many more. 

What are the unique characteristics of deep tech startups? 

• It takes more time, resources and talent to develop a market-ready technology
• The technical challenges are not only limited to the R&D phase, but also to inventing and adapting manufacturing processes at scale. More often than not, this leads companies to build their own manufacturing facilities to build the entire product or only some of its components
• While for a tech startup the best path forward is usually achieved by defining the problem, talking to users and rapidly iterating on the product; a deep tech startup lays its foundation on the Intellectual Property (IP) developed within a certain field, which is then utilized to target a specific application

It should be clear by now that deep tech companies require more resources to come to fruition, both in terms of time, talent and capital. 

We're going to focus specifically on life sciences and technology companies but most insights hold true for the other deep tech categories. 

What are the needs and challenges of a deep tech startup?

• Research collaboration: the core technology is often created in Universities and Research Institutes for whom paving the road for smooth commercialization is rarely a priority High funding requirements 
• TRLs - Technology Readiness Levels: a lower TRL offers more optionality in terms of applications but also increases the risk to develop and deploy the solution
• Market readiness: the target customer base might be more or less mature to adopt new technology. This can be related to industry trends and/or heavy regulations 
• A strong ecosystem: it's not possible to only rely on internal resources and therefore deep tech startups need to work together with other companies, infrastructure providers, governments and industry associations 
• Talent: finding the right people who have technical understanding, interest in commercial applications, the right mindset and who are keen to join a startup is a common pain point
  

The stages of a deep tech startup 

A well-known framework for tech startups is one where a team is searching for product-market-fit by rapidly iterating on the product, understanding the market and talking to users. Most tech startups never get to product market fit, but the ones that do rapidly acquire new users, attract more investments and scale the business. 

In a deep tech company, the R&D phase can last multiple years and is usually financed by universities, governments and small investors. Entering a market for the first time usually does not trigger a rapid expansion but it looks more like validating the first use case, which will slowly trigger more adoption in the same market, before potentially moving to another market, where different entry barriers might create new challenges. 

‍

The remaining part of this article will focus on how it feels to work at each phase of a deep tech company and how it impacts talent looking to join a startup. 

R&D phase 

• Employees: 2-10 
• Location: university lab or science park 
• Valuations: <€5M 
• Funds raised: €0-2M 
• Investors: universities, public organizations through grants, business angels 

The seeds of a deep tech startup usually come from an academic laboratory or a research institution that received funding to investigate a specific field, sometimes as a quest for exploration, other times to answer a broad unmet need. 

During this process, which could take many years or even decades, a core breakthrough innovation is developed, which can still have many unique applications, therefore retaining a high degree of optionality.
It's in the hands of the inventors to identify the right beachhead application, which in return will define the product characteristics. The risk in this phase is to become a "solution looking for a problem", which all evidence says it's a dangerous path for everyone involved.

This phase feels a lot like an extension of a PhD or PostDoc. Most founders are transitioning from a purely technical focus to a more commercial mindset and are starting to delegate technical tasks to their team, which is usually made of other researchers or engineers who might be employed by the university or financed by government grants while working on the startup.

As soon as a commercial future appears on the horizon, new boundaries and different roadmaps appear compared to a pure research project. This means facing new challenges around processes, boundary conditions, impossibility to use certain materials or methods and so on. 

The exciting feeling of building a world-changing solution is compensated by the fact that things in the lab hardly work out the first time and sleepless nights will be spent trying to solve unexpected challenges. 

If you join a startup at this stage, you're part of the founding team and you'll be asked to do a little bit of everything. You'll have to be comfortable with an almost unbearable degree of responsibility and self-direction. 

You'll face the same daily question every founder has: "What should I work on today?". It will look like there are always more fires than you could ever handle and it's your job to prioritize what to focus on so that it moves you and your entire team closer to your goals. 

Working at a startup at this stage feels a lot like being part of a family and chances are that you'll spend more time with them than your actual family, from having lunch together to hanging out after work. 

Being part of such a team in an academic environment also feels like playing a different game compared to every other researcher around you so you'll tend to spend even more time with your team and people working at other startups as you'll easily relate to each other. 

Building the right team at this stage is key for long-term company success, although many people underestimate its importance. 

The reason is that you're not just hiring the first 10 people. If you succeed, you've actually hired hundreds of people, because those first hires are going to grow into leaders and hire tens of people each. 

Getting those first hires right will set you for success and the team will get stronger as it gets larger. On the other hand, even a single bad hire can set such a young company up for disaster. 

At this stage, hires usually come from the same university network where the technology has been developed and they have a strong technical background, even if their job might evolve in the future to more commercial roles. 

Joining a startup at this stage is not for everyone. Salaries are usually below average and although the potential of the technology is clear, the risk of failure is extremely high. 

Go-to-market 

• Employees: 11-30
• Location: independent lab or science park plus one or more offices 
• Valuations: €5-20M 
• Funds raised: €2-10M
• Investors: specialized investors, corporates and large international funding schemes 

This phase of the startup life begins when the company has the first product in the market or is undergoing in-human trials. 

Leveraging some initial traction with pilots, clinical trials, collaborations and technology de-risking, allowed the team to raise some money from professional investors who saw real commercial potential in your technology. 

This means that people working at the startup can now get real salaries and the team will expand with a few people who have technical understanding and commercial expertise. More capital and a stronger track record also allows companies in this stage to start attracting senior professionals to lead specific functions. 

The founder is often not involved in day-to-day technology challenges and can focus on paving the road to partnerships with larger stakeholders and institutions, facilitating the future market adoption of the product. 

At this stage, R&D efforts are still ongoing but a first version of the product has to be finalized to validate its use under different conditions and apply for regulatory clearance as needed. 

While the R&D team keeps working on product iterations to improve outcomes or adapt the product for different applications, many team members will take on roles that require a deep technical understanding but do not involve working in the lab. 

These roles can be quality assurance, regulatory affairs, business development, clinical operations, project management and so on. 

If you're curious to learn more about those roles, check out our career guides. 

Working in a company in the early go-to-market phase feels like a more diluted version of the pure R&D phase craziness. New hires have more defined roles and more or less clear objectives. Sometimes a single person has to be responsible for an entire department but the number of fires a single employee has to deal with are way more limited than in the previous phase. 

Overall, it still feels like a close group of people working to achieve an important mission but there is more structure and the influence of external stakeholders such as investors, large partners and public institutions contributes to the feeling that a research project is turning into a fully-fledged company. 

Towards the late part of this phase, companies with proven technology and proven market readiness are able to raise a lot of capital to scale their operations and this is when there might be some comparison with the hypergrowth phase of tech startups. 

Being an employee at a company at this stage can change drastically in just a few years but you're usually asked to find new areas to add value to the organization so you can facilitate internal processes and align them with external objectives. This also includes building systems, hiring and training new people.

Also, building personal leverage becomes key to making the most out of any incoming changes, which will also allow you to grow personally and professionally. 

Growth 

• Employees: 30-200 
• Location: proprietary laboratories and offices 
• Valuations: €50-200M 
• Funds raised: €50-100+M 
• Investors: generalist growth investors and corporates 

This phase is characterized by having one or more products already in multiple markets alongside an overall market readiness that allows the company to invest in distribution, marketing and sales to reach its customers. 

A lot of deep tech companies never fully experience this phase because they get acquired as soon as signs of early growth are visible. 

This happens for a variety of reasons, here are 3 important ones: 

• The inefficiency of building in-house international sales and distribution capabilities compared to adding a new product to those same frameworks that already exist in established companies 
• The appetite of investors to get a return on their investment, especially when the path to the public markets is not clear 
• The willingness of a large player (usually a market leader) to consolidate its market position 

For the companies that reach the growth phase, major shifts happen: 

• The scientists/founders who have led the company so far step down from executive roles and experienced managers come to lead a company that operationally has little to do with the startup of just a few years ago 
• Communication becomes challenging and behavioural norms turn into something to be defined within groups, rather than company-wide 
• Silos and multiple layers of management emerge 

A company at this stage can hardly be considered a startup and it is a valid alternative to working at a large company in terms of salary, career opportunities and skills that you'll develop.