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Risks that investors should keep in mind while assessing deep technology startups: Market Risk: The probability that there will exist demand for a product. Often, deep technology companies do not carry a high market risk (e.g. if a new therapy is discovered for cancer, there will likely be a market for it). Assessing market risk involves evaluating the potential demand for the innovation. Competitor Risk: Due to multiple approaches to solving similar problems, deep technology startups often face competitor risk. This risk can be assessed by talking to customers to understand their awareness of alternative solutions and consulting with professionals to gauge the competitive landscape. Technology Risk: Deep tech startups inherently carry significant technology risks. Investors can benefit from inquiring about the evidence supporting the technology's success, asking for data from experiments/tests, and seeking industry professionals’ opinions on the technology's viability and scalability. Regulatory Risk: Companies that are regulated, such as those by the FDA, face regulatory risks. Evaluating this risk involves understanding the likelihood of the startup's product passing regulatory scrutiny. Comparing the startup's technology to previously approved applications and seeking specialist insights can help assess regulatory risk. IP Risk: Intellectual property (IP) can be valuable but may not provide a substantial competitive advantage in some cases. Investors should carefully examine the startup's patents, their scope, and how they protect the technology. Execution Risk: Assessing execution risk involves evaluating the startup's team, technology development plans, production scalability, sales, marketing, and distribution strategies. An objective judgment about the team's potential to achieve goals is important. Exit Potential: Investors need to consider the likelihood of a profitable exit. This involves assessing factors such as low valuation measured against perceived worth at the time of investment, potentially high exit multiples, favorable investment terms, and possible interest from acquirers or the public market. Determining Acquirer Interest: As a proxy for exit potential, the framework suggests listing at least five companies potentially acquiring the startup. If multiple potential acquirers exist, it suggests the startup is creating something valuable. Investor Calls: Hosting investor calls with startup teams allows investors to engage directly with the management, ask questions, and assess the team's ability to execute their plans. Overall,?Propelx's framework provides a systematic approach to evaluating deep technology startups, considering their unique challenges and opportunities. Check out?Propelx.com?to understand more about due diligence and go through a detailed list of highly curated deep tech startups.

Framework for Investors to get started in deep tech! Deep technology companies are different from your average internet startup. Their risks, development timelines, and cash needs are very different. This framework is designed to help potential investors assess the risks and opportunities associated with deep tech companies. Let's break down the framework step by step: 1. Identifying Favorable Outcomes: ???The goal is to identify companies with the potential to yield favorable outcomes for tech startup investors, particularly those that can maximize sustained profitability rather than just addressing a large market. 2. External and Internal Risks: ???The framework considers both external risks (e.g., market and competitor risks) and internal risks (e.g., technology, regulatory, IP, time to revenue, and execution risks) associated with the startup. 3. Total Addressable Market (TAM): ???The outermost circle represents the total addressable market, which includes the potential demand for the product or technology. Some of this market share may already be captured by competitors. 4. Costs and Expenses: ???The costs and expenses incurred by the startup include expenditures associated with technology development, IP protection, regulatory compliance, and sales and delivery costs. 5. Profitability: ???The innermost circle represents the potential profit left after deducting costs, giving insight into the probability of sustainability. To understand how this framework is applied in assessing deep technology startups, stay tuned to our next post!

Some people believe that deep tech startups rarely see exits. Let's debunk that myth. On the Propelx platform itself we have seen deep tech startups raise money and then exit via IPO or M&A. While past performance does not indicate or guarantee future success, it can still be very useful to look at the team’s track record when evaluating a set of investment opportunities. Here are Select five examples of companies previously featured on Propelx that later had an exit: 1. Abtum Inc. (Acquired). -? Acquired by Qorvo in 2018 2. Deep Space Industries, Inc. - Acquired by Bradford Space 2019 3. Drastin - Acquired by Splunk in 2017 4. IntelliVision, a Nice company - Acquired by Nortek Security and Control in 2018 5. Smoltek - IPO in 2018 So, what does it mean to invest in startups with breakthrough potential? Investing in deep tech is investing in innovation. These success stories are a testament to that. If you're intrigued and want to explore more opportunities, consider registering on Propelx.com Take the opportunity to be part of ground-breaking innovations. Sign up on Propelx today to access exciting deep-tech investment opportunities! #deeptech #startup #investments