Moonshot startups, those daring ideas that promise to reshape our world, are inherently about venturing into uncharted territory, giving us new superpowers and creating new markets. They’re high stakes, high reward, and, more often than not, deeply technical. As someone who navigates these waters, I see firsthand that when securing funding, it’s just as crucial to mobilize generalist VCs as it is to mobilize sector-specific investors for your round.
Yes, having sector-specific investors on board is invaluable. But we shouldn’t underestimate the power of the generalist perspective. They provide something different — a broader, more expansive viewpoint. Yet, convincing generalist VCs to bet on these ambitious ideas is an art.
The task is doubly daunting in a strained economic environment. Just look at biopharma. The industry is projected to have raised the lowest tally in four years. When purse strings tighten, VCs — particularly those without a deep understanding of the specific technical domain — often revert to a more conservative approach to investment. This conservatism can inadvertently sideline the most transformative ideas that promise financial returns and significant societal impact.
So, how do founders of highly ambitious, deeply technical startups navigate these choppy waters? How do they convince generalist VCs to invest in ideas that demand a leap of faith and, perhaps, a leap of understanding? Drawing from my experiences raising for my reproductive technology company Orchid, I’ve outlined key strategies to help founders navigate this journey.
Tell an epic story of how the world will be better if you win
First and foremost, the key lies in effective communication. Translate your complex, technical vision into a narrative that resonates with a broad spectrum of investors. It’s not about diluting technical aspects or dumbing down the science; instead, it involves crafting a story that highlights the potential impact and value of the idea. Investors need to see not just the brilliance of the concept but also its practical implications — how it addresses a real-world problem, the scale of its potential market, and its feasibility.
Translate your complex, technical vision into a narrative that resonates with a broad spectrum of investors.
Every great venture has a story — a story of challenges, breakthroughs, and visions of a changed world. Telling this story in a compelling way can capture the imagination of generalist VCs, who are often looking for the next big idea to disrupt the market. A general guide to follow:
- Why now: Start by contextualizing the problem your venture is solving. Explain why this problem hasn’t been solved to date and what has changed, making it a good time to solve it now. Paint a picture of the current landscape and the gap your technology aims to fill. This is especially important for moonshot ideas, which often have higher R&D and CapEx (capital expenditures) costs but are now possible only because of other recent tech breakthroughs.
- Humanize the tech: At the heart of every technical solution is a human problem. Relate your technology to real-life scenarios and potential impacts on people’s lives. This human connection makes complex ideas more relatable and compelling.
- Show momentum and speed: Share the story of your company’s evolution — the challenges faced, breakthroughs achieved, and lessons learned. Show that you can punch above your weight regarding who you can attract and what you can do. Show you can do more with less. You want to showcase resilience, innovation, and the progressive realization of your vision. Generalist VCs hear many pitches from software companies that promise breakneck growth. Your moonshot company needs to build momentum to compare.
- Share your vision: Articulate a vivid vision of the world transformed by your technology. This isn’t just about the technicalities of your product but the broader impact it can have on industries, societies, and everyday life. It has to be compelling enough for intelligent people to join you; you’re selling to an investor like you would a candidate, and they want to assess your ability to attract talent.
- Emotional appeal: Connect with your audience on an emotional level. Share your personal motivations, the passion driving your team, and the aspirations behind your company. Emotionally charged storytelling can create a lasting impression and clarify why you and your team are the best positioned to take this venture on.
Remember, storytelling is about creating a compelling, holistic narrative that connects the dots between cutting-edge technology and its broader implications. It’s about making your vision relatable, understandable, and exciting — transforming a complex idea into a story that inspires and motivates.
Give milestones you’re confident are achievable in a year or two
While narratives are powerful, they need to be grounded in reality; you need to align your ideas with the interests of generalist VCs. This requires a deep understanding of what drives these investors: return on investment, market potential, scalability, and risk mitigation.
You must articulate how your moonshot idea, while ambitious, has a viable path to profitability and growth. It’s about showing investors a path from a brilliant idea to a market-leading product.
Provide clear, data-backed insights into your target market’s size and how your solution can scale to meet this demand. Paint a picture of the vast opportunity that lies ahead. Find ways to showcase a community already excited about your product, whether it’s early adopter testimonials, pilot program results, or even partnerships with notable industry players. Demonstrating there’s a genuine market interest and potential for adoption goes a long way in convincing VCs of its viability.
Consider a startup developing an advanced composite material with an exceptional strength-to-weight ratio to revolutionize aerospace, defense, space, and many industries. However, the initial technical complexity and uncertainty in market fit might cause hesitation among generalist VCs. What they can do is conduct thorough market analyses to pinpoint sectors where their material could be immediately applied, such as in the creation of lightweight, fuel-efficient vehicles. Secure customer contracts from major automotive manufacturers, tangibly demonstrating market interest. Lay out a clear, detailed roadmap for scaling their material for mass production. VCs generally distrust go-to-market plans from moonshot companies, so be sure to back yours up with evidence and data of the progress you’ve achieved.
Show evidence of exceptional ability
Your deep technical knowledge is your strength. Leverage it to build trust and credibility with investors. Show investors how your expertise and unique insights give your venture a competitive edge. It’s not just about the technology itself but also the solution it provides. In Orchid’s case, our success was partly due to our deep understanding of genomics and ability to leverage this knowledge. Explain how your expertise translates into practical, effective solutions.
Back up your claims with evidence; this could be in the form of patents, research papers, prototype developments, or endorsements from other experts in the field. Tangible proof of your technical prowess can significantly bolster your credibility.
Build in public — show your work
Building relationships with VCs goes beyond the boardroom. It’s about cultivating relationships that extend into various facts of the ecosystem. Engage with them at industry events, through mutual connections, or even on social media. Share updates about your progress, insights into your industry, and thought leadership content. Regular, informative updates can be nuggets of education for them and ease the initial barriers to understanding your technology.
Stay resilient — the journey to secure funding is rarely smooth
Navigating the VC market with a non-conventional idea requires resilience and adaptability. Rejections are part of the process; each no brings you closer to a yes. Founders should be prepared for initial skepticism and rejection and use each interaction as a learning and refining opportunity.
Your next major milestone or proof point is what draws in investors, especially those who are more risk-averse. Customer interest and validation are the fundamental indicators of success, not just securing VC funding. Investors are often attracted by the momentum created by customer interest. It’s essential to distinguish validation from VCs from actual market success; true validation comes from your customers. Focus on winning them over, and investors are likely to follow.
Being able to build something people want is more rare than being able to write a check
Suppose you’re confident you and your team have a real shot at building something extraordinary people want. In that case, you have a hot commodity in high demand. Founders who can bring cutting-edge science to the world are what bring our society forward.