Building Technology Defensibility into Your Industrial Tech Product
A guide for deeptech startup founders to build superior tech products
A critical factor in building and scaling a successful Industrial DeepTech Venture is the creation of an exceptional product driven by cutting-edge technology. Superior technology offers several advantages that can give a venture a competitive edge, deliver a distinctive value proposition to users, facilitate seamless scalability, disrupt existing products, and much more. By prioritizing the integration of superior technology into the product, ventures can position themselves for success in the market.
To successfully scale a industrial deep tech startup, it is crucial to embody four key attributes within the startup’s product:
- Breakthrough Tech
- Generic Core Product
- Disruptive Potential
- Opportunity for IP Licensing
1. Breakthrough Tech
Technology, fundamentally, is the translation of a scientific discovery, invention or research into solutions that can solve real-world problems. Breakthrough Tech is one where the technology:
- Has a disruptive potential
- Is the most advanced technological solution available in the market
- Is a dominant standard in addressing multiple use cases across different industries
Consider Machine Learning, as a theoretical concept it was conceived during the 1940s, and during the second half of the 20th century, IBM and other tech companies started building computers that had machine learning capabilities. These computers, however, at that time, had limited capabilities, but as other technologies advanced, machine learning started to become more & more powerful and mainstream. Today, we have limitless applications for machine learning from providing movie recommendations to predicting the breakdown of industrial equipments.
To illustrate this further, take NoPo Nanotechnologies—a startup that has successfully developed a single-walled carbon nanotube called HiPCO. This technology is the translation of two decades of research on carbon nanotubes by renowned scientists/researchers at Rice University. HiPCO has significantly higher thermal & electrical conductivity than metals, is efficient in water transportation, has very high strength, and has other superior properties.
This opens up multiple applications for HiPCO in wastewater treatment, batteries, lightweight electrical wirings, electronics, composites, etc., just to name a few. These use cases range across multiple sectors including energy storage, drones, aerospace, industrial applications, space, defence, etc. In addition to that, this technology has the potential to become the dominant standard & most advanced technology to address these use cases across industries.
Startups trying to build an enduring technology advantage in their products should focus on building such breakthrough technologies.
2. Generic Core Product
Core Technology/Product is a technology or product that becomes a sub-system or a component in a product that end users use. Take Intel chips for example, no matter what computer you use it’s Intel’s Processor that powers it. And Intel powers around 75% of the computers on Earth.
However, many startups try to build & own the entire value chain — right from design & manufacturing to reaching end-users. For example, a startup that is trying to build electric & autonomous vehicles. The startup has to handle multiple areas — designing & manufacturing the motor, battery pack, transmission systems, etc.; creating the autonomous suite; branding; distribution; after-sales service; and plenty of other areas. Firstly, the startup loses focus and ends up building mediocre components & finally a medicore end-product. Secondly, building the entire value chain requires huge efforts & resources — both of which are limited in a startup. Finally, there are existing & established companies that are already doing that in a much better way.
In contrast, consider Torus Robotics, a startup that is developing an Axial Flux motor that is lighter & energy efficient compared to existing motors. Being a unique technology, the startup’s Axial Flux motors have the potential to become a component in EVs, pumps, blowers, and at least 100 other applications. This opens up a huge market opportunity for the startup, while keeping the resources focused on only building and improving a world-class motor. And the startup need not focus on branding, distribution to end-users, etc.
Another example is SafeAI, a startup that converts existing mining and construction vehicles into autonomous vehicles, through its proprietary autonomous software suite. Here again, the startup doesn’t lose focus and only focuses on building a superior autonomous suite that others can’t replicate.
Core technology or product is usually the result of the ‘Core Competencies’ of the startup. Core Competencies are the skills, knowledge, capabilities, know-how, and other resources the startup possesses. These competencies should be unique, making them hard for others to replicate — hence a primary source of competitive advantage. Core Competencies then translate into core technologies & core products which become the raw material for developing multiple end-products that serve multiple use-cases in multiple industries.
Hence startups should first focus on building & developing core competencies within their team for it to translate into superior technologies later.
There are of course exceptions to this, like Tesla and Apple, that has built the entire value chain and with multiple core products too. But as mentioned these are exceptions, not the rule.
In general, adopting a core technology/product strategy is one of the best ways for industrial tech startups to differentiate themselves and a way to venture into multiple industries at the same time.
3. Disruptive Potential
Disruptive Innovations are the key to the mass adoption of technologies that were previously expensive, hard to access, and complex to use.
Take computers for example, when it was invented during the mid-1940s, they used to occupy an entire room. It was very expensive, required engineers to operate and had limited capabilities. So only a handful of top universities around the world were able to afford and use it. Thanks to IBM, Apple, Microsoft, and others, computers became less bulky, affordable, easy to use, and had more capabilities. This made the majority of businesses and households own desktops & laptops, serving a wide variety of applications — from launching rockets to playing games. And today’s computers, mobile phones for example, fit in our pockets, are affordable by anyone, intuitive to use, and have limitless capabilities — so almost everyone owns at least one.
Disruptive Innovations are always powered by advanced technologies at the time when it was built, and would also change the fundamental business models around them, to facilitate mass adoption. Early computers used vacuum tubes, which were bulky, but when transistors (an advanced technology at that time) started replacing them in the 1950s, the size of computers was reduced. As processor, display, storage, and other technologies advanced over time, computers became smaller, faster, and easier to use. Today’s computers are powered more & more by Artificial Intelligent — an emerging/advanced technology today, making them even more powerful. And the next generation of computers will most likely be powered by quantum technologies — quantum computing, quantum cryptography, etc., and will probably have sci-fi-like capabilities.
alveofit, one of the startups supported by Forge Innovation & Ventures, has developed a handheld & portable spirometer for respiratory health monitoring. Traditional spirometers are bulky and require experts to operate, so they can only be found in big healthcare facilities. A single lung health test using traditional spirometers costs about $20, while Alveofit’s test costs only about $0.5. Also, Alveofit’s spirometer doesn’t require experts to operate and can even be used by individuals for home care. This changes not only the technology but also the existing business model — paving the way for mass adoption of spirometers.
Startups trying to disrupt existing products should focus on building such Disruptive Innovations — giving them access to previously unexplored markets, providing high value to users, and a product that is unique & hard to replicate by others.
4. Opportunity for IP Licensing
One effective strategy for scaling a product is to leverage IP licensing deals as a means of monetizing the technology. Startups can enjoy several advantages from engaging in IP licensing:
- Generating revenue without the need to manufacture or market products themselves.
- By licensing their IP to established companies, startups can tap into new markets and expand their customer base.
- Aligning the startup’s technology with reputable industry players, through whitelabling for example, can enhance the startup’s credibility and improve customer trust. This is especially valuable for startups aiming to attract investors, partners, or customers who prefer engaging with a company that has a proven track record.
However, it’s important to note that not all technologies are suitable for licensing. Therefore, startups must carefully design their underlying inventions, know-how, proprietary science, design, and processes to facilitate commercial and IP licensing. In essence, the technology should be adequately protected by patents, copyrights, trade secrets, and other appropriate measures, for it be licenseble.
To illustrate the same, take Goenvi Technologies Pvt. Ltd., a startup that has developed a technology to convert plastic waste into alternate fuels through pyrolysis technology. The problem with pyrolysis is that it requires a very high temperature, around 600 deg C, making the process inefficient — i.e. consuming significantly more energy than the output. However, Goenvi has pioneered low-temperature pyrolysis, at around ~250 deg C, making the process practical. This is possible through Goenvi’s proprietary pyrolysis plant design & the catalyst they use in the process.
With its IP protected plant design, catalyst, and overall process, Goenvi’s technology holds substantial potential for commercialization through IP licensing deals. By partnering with, say a prominent oil & gas company, Goenvi stands to gain numerous commercial advantages. These include accessing a well-established manufacturing facility, leveraging an extensive distribution network, and benefiting from the brand-building credibility associated with an established company.
These are insights from the Forge Venture Rubric — a tool that helps startup founders to build & scale successful industrial tech ventures, developed by Vish Sahasranamam, Co-Founder & CEO of Forge. At Forge, we help industrial tech startup build products, raise funds, provide them with market access, and scale successfully. Know more about Forge here — www.forgeforward.in.
