The role of corporate pathfinders and activators in frontier tech
This story is brought to you by Antonio Castro Neto and Pierrick Bouffaron.
AM2 is a Singapore-based venture studio that creates and strengthens science-startup projects in the advanced materials and advanced manufacturing fields. Join an incredible community building the future 🔥🤖
Frontier tech ventures are usually built around a novel technology that either solves a fundamental market demand or offers significant advances over existing solutions. More frequently than their digital counterparts, they create new opportunities and markets that did not exist previously. Taking these technologies from the “lab floor to business” requires a substantial human capital and investment, carrying a different degree of risk than the average venture investment, which leads less sophisticated investors to become hesitant and shying away from tremendous opportunities.
In this context, universities play an important role in de-risking, funding and helping the early commercialization of frontier tech companies: we are extremely lucky to have the support of the National University of Singapore (NUS) and the National Research Foundation (NRF) in our entrepreneurial endeavors. Obviously, this support does not prevent our team of science entrepreneurs from facing regular venture building complexities, and the usual ‘valley of the death’ in the later transfer stages. But it constitutes a welcome differentiator against international competitors, and shows how Singapore plants the seeds for tomorrow’s high-tech champions.
While frontier tech startups can come out of any university, not all universities have real commercialization experience and a supportive frontier tech ecosystem. Looking at their very own ecosystems with pragmatism, science entrepreneurs should leverage every advantage that the university environment can provide, such as incubation space and top-notch facilities, and connections to scientific experts who can be leveraged as consultants and advisors. Voicing out what should be adapted — or improved — within universities to make the life of science entrepreneurs easier is essential. It goes from sharing best-in-class technology maturation principles from other research ecosystems, to challenging conservative intellectual property frameworks, or asking for more contractual creativity and speed.
Step 1: Find your corporate pathfinders
When it comes to financing frontier tech start-ups, available university grants such as GRIP can help catalyze and do a certain amount to de-risk technology, extending the runway through non-dilutive funding and by creating a technology roadmap which validates the science as significant. Many science entrepreneurs feel too comfortable at this stage. They get easily trapped in the endless loop of grant funding, overlooking the efforts to be put into corporate partnerships. This is a risky strategy. Corporate venture funds and strategic investors have a major impact on early-stage startup developments, alongside non-dilutive funding. Not only can they be a check, they can be a customer, an advisor and a partner in the early prototype to manufacturing stages. The best strategic investors play a fundamental role in helping frontier tech ventures succeed, because they need the technology the entrepreneurs are creating. At AM2, we call them our corporate pathfinders, as they help us identify, define and validate market opportunities.
Why are they so important? Let’s face the hard truth: frontier tech start-ups experience a very different evolution cycle than a traditional B2B company, let alone a B2C company. Go-to-market paths and commercialization activation keys tend to be more complex. They require science entrepreneurs ready to embrace a steep learning curve. For instance, a common pitfall is that early-stage teams overestimate the size of their hypothetical markets, which in practice turn out to be much smaller given the complexity of the developed solutions. Very complex does not relate to large market opportunities, it is rather the opposite. At AM2, we experience this regularly, interrupting or reorienting projects that, over time, prove to be too small of an opportunity. Timing and market maturities are two other key elements to study carefully. Some technologies are just too early to reach and grow on the market, due to multiple structural factors. Despite all the efforts deployed by the venture team, the market might not be ready for a technology even if it is solving a very important problem.
Our corporate pathfinders help us find a way through the pre-industrialization maze, co-drafting a roadmap to market, and challenging the possible paths. Once we agree on a joint market opportunity, they are expected to morph into different players: corporate activators.
Step 2: Leverage your corporate activators
Frontier tech ventures face several challenges that strategic investors can help to address. Firstly, owing to tough global competition (and the inherent noise), it has become increasingly difficult to differentiate B2B offerings on the basis of functional benefits. It is especially the case in the advanced materials fields, in which “wonder materials” are regularly touted to investors and corporations alike. With a growing number of market players, customers have to choose between many offerings that promise similar levels of quality. In addition, business customers frequently require tailored solutions for which it is more difficult to evaluate the quality before the purchase.
Secondly, the traditional narrative of B2B transactions based on highly rational decision processes in which customers exhaustively survey the available options in the marketplace and select their partners on the basis of objective performance dimensions — such as availability, functionality, and reliability– is far from the reality we face every day. An alternative point of view to this traditional approach to B2B marketing is the interaction perspective, that emphasizes the importance of personal selling and the relationship-building function of go-to-market and sales interactions. Those efforts take time. In terms of recurring revenue, they are a game changer over the medium term.
Finally, frontier tech offerings are inherently complex: the product or delivery of a service require customization to the specific business needs of customers and the value chains they are embedded in. It is a core trait of what we do in advanced materials. In such turbulent and fierce competition times, customers do not want to be passive. They have become active entities willing to contribute to a startup development: value co-creation has become the new paradigm in contemporary frontier tech marketing. By involving our strategic partners in the value creation process, the AM2 teams strive to build stronger relationships and secure over time more loyal and satisfied corporate customers. It is a win-win situation. Building on mutual trust, our corporate activators start showcasing our brands and products internally (i.e., spreading the word to business units), and externally with a selected range of existing clients and partners.
As a conclusion, we cannot emphasize enough the effectiveness of corporate pathfinders in science-push market discovery, and corporate activators throughout a market penetration journey. Co-assessment, co-innovation, co-development and co-design have become more pervasive. They emphasize the positive synergistic effects of those science-industry interactions, from building solid business networks to developing collaborative ecosystems, from Singapore to the world.
