Flexciton’s CEO and Co-founder, Jamie Potter

Flexciton’s Jamie Potter on surviving the early stages as an industrial enterprise startup

In an industry where commercial success cannot be rushed, here’s how Flexciton navigated its way to a Series A

JOIN CAPITAL
Nov 29, 2021 · 7 min read

For startups working in industrial tech, patience is key. There’s no one who embodies the value of patience more than — the UK-based tech company that has perfected wafer fab scheduling technology for the semiconductor industry.

Five years after its founding, Flexciton has finally during a global semiconductor chip shortage. For co-founder Jamie Potter and team, this is a huge milestone to celebrate after a long road with a steadfast vision.

We spoke with Jamie about how he managed long sales cycles and investor relations during the crucial early period in his company, which is now poised to revolutionize a massive global industry.

How does it feel to get a Series A after 5 years, and what does that mean for you?

I think that’s a really interesting question for companies that are in our kind of space. Startups move at very different rates, right? Some are founded and they’ll do a Series A within a year, and then a series B within another year, and they start to grow really, really quickly. The reality is that we’re the type of business that doesn’t have that. If you want to build a deep tech company in an industry with a long sales cycle, it’s going to take you much longer to get to the point where you’re going to start to see the similar levels of growth.

For us, it took years to develop technology, and we’re also talking about a two-year sales cycle. So that means that even if you make your first customer on day one, nothing gets deployed for until two years in. It’s just impossible to have the same kind of trajectory as some of the other companies that have simpler products and sales cycles.

On the flip side, some of those simple products aren’t as “sticky”. Our reality is that when we get in, we become a very important part of the way a factory operates. As a result, we intend to build relationships with our customers for really long periods of time. So it’s worth the wait.

Team Flexciton

How do you address these kinds of long cycles with investors along the way?

I think something that I’ve learned is that some investors are going to get it and some of them are not. You need a certain type of investor that’s looking for, and willing to wait for, that long of a sales cycle and product development cycle. They know that the long-term is where they’re going to see returns, also they also know you’re going to build such strong relationships with the companies you ultimately sell to.

If you take the wrong type of investor who’s trying to set you revenue milestones, and they don’t even know anything about your business, in reality what’s good for you might not match what’s in their head — for example, if they’re thinking about a consumer business.

So looking for investors, now I look for people who are interested in revolutionizing old industries. Slow-moving industries which also have high value in terms of strategy. Join is this type of investor, for example.

Why was now the time for you to raise your Series A?

We started off very much as a tech company, with a specific technology versus from a specific industry problem. So for us, it was about navigating what the best application of all that technology was. And also managing the time it takes for a long sales cycle. You can’t iterate as quickly.

We had customers in textiles and food and automotive, as well as in semiconductors. What we realized was that if we wanted to build a product that was really going to work exceptionally well, we needed to focus. It’s very hard to build something that was going to be able to do really well in any type of factory, right? At the same time, we needed to find the area where the sales cycle, then the contract size, actually makes sense. What you’ll often find in a lot of other manufacturing verticals is that the sales cycle might still be long, but the contract amount that they’re willing to pay isn’t it that much. So you can’t really justify the cost of sale against what you’ll actually get back at the end of it. We did that journey, and basically, we needed to communicate that the value is there. No one else is doing this technology, so we can justify our price point.

We got to the point after that learning and development where we brought a very sophisticated technology to market, that actually works producing real results, and we’re generating huge amounts of value.

Because we felt we found our direction, we knew that now’s the time to raise a lot more money in order to grow the business. We found that fit.

When we get in, we become a very important part of the way a factory operates. We intend to build relationships with our customers for really long periods of time. So it’s worth the wait.

As a founder, how do you manage this situation where you’re not seeing these immediate results every week? How do you set milestones that you can then convey to stakeholders?

You have to be realistic about the realities of your business. If you’ve got a sales cycle that takes three months, you’re not going to close two customers next week if you just start tomorrow. You have to be realistic about what you can achieve in a certain timeframe, set those milestones out and confirm them with the board and with your investors, get everyone aligned. As long as that path will actually still take you to a very big successful company, it’s fine. You have to look at a longer timeframe, break it down and say okay, what do we actually need to achieve in the next quarter to make sure we’re on track for that? Admittedly, for example, finding a customer is a big win. When that time comes, you celebrate.

Do you personally ever find it hard to be surrounded by other companies who may have shorter sales cycles and just generally have a faster growth trajectory?

Some companies just shoot off really quickly, but you also see a lot of companies that don’t do very well at all. As a founder, you quickly realize you shouldn’t compare yourself to other companies — especially not the ones in completely different industries and verticals. As long as you’re genuinely passionate about what you’re doing and you care about achieving that vision, then that’s what matters the most.

I think some founders sometimes get into the game for the wrong reason, and they try and build a company and flip it within a couple of years. I said to our investors in this round, and I meant that, I’m already five and a half years into this. I’ll do this for another 10 years. I’ve seen a lot of factories. I’ve seen the latest generation products in semiconductors, and they can’t manufacture at the scale needed. They need industry 4.0 technologies like what I’m building to enable the next generation of electronics. So if we really want to have autonomous vehicles all over the world, somehow someone’s got to figure out how to produce those electronics at scale. I’m so passionate about it, and I’ll do it as long as it takes.

What has Join Capital meant on this journey for you?

I met Tobias through a recommendation, and Join was one of the few — maybe the only one — who was really targeting industry 4.0. That, to me, is very attractive. Tobias is patient and understands the industry and the dynamics, even when there are few companies who are role models. Join has invested multiple times, and we always have good discussions with the board. He helps me and challenges the strategy, and at the end of the day, he buys into it. That’s what I feel like I need from investors, is that trust and the right expectations.

Now that you’ve announced this funding round, what’s coming next?

Right now, we are currently deployed in 70% of the Seagate factory. Almost every minute of every day, we’re moving wafers around 70% of that factory. We’re showing some real gains, and success is no longer theoretical — it’s real. Right? So we’ve got to that point where we’ve made that technology work. Right now, it’s so hard to make so many semiconductors at scale, and you need smart ways to do it. As a result, we’ve got a lot of demand. We’re starting to deploy now in Europe and in the US. We’re hoping to go to Asia in the not-too-distant future.

You need a certain type of investor that’s looking for, and willing to wait for, that long of a sales cycle and product development cycle.

Do you have any advice for founders who are working in deep tech and with similarly long sales cycles?

To summarize it, just be ambitious, but patient and realistic. Don’t succumb to the unrealistic goals of uninformed VCs, but figure out what is realistic for your business and put that plan to investors. Frankly, if they aren’t interested, they’re not the right one for you. There are people out there that are. This is a long-term game that you need to be committed to, and there’s huge potential in some of these industries. I mean, literally everything in the world is manufactured. What more of an impact could you make? Maybe it takes you 10 years to make that impact, but you could affect everything in everybody’s hands. It’s worth the perseverance.

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