Deeptech Due Diligence: Technical Validation Framework to Build Investor Conviction

Proving It Works: Technical Validation and Proof of Concept Requirements

An investor’s first question is simple: Is this real? Your primary job is to provide a hierarchy of proof that addresses their skepticism head-on. This is not about overwhelming them with raw data but about telling a clear story of technical validation, progressing from minimum viable data to functional prototypes that meet key performance metrics.

While founders often lean on the formal Technology Readiness Levels (TRL) scale, investors typically think in more direct terms. It is more effective to map your progress to their fundamental questions, using the TRL framework as your internal guide.

• Does the science work? (TRL 1-3): This stage is the domain of simulations, peer-reviewed papers, and bench-level experiments that demonstrate your core scientific principles.
• Does the technology work? (TRL 4-6): Here, you answer the question with a working prototype. You need to show that the core components function together in a lab or a simulated environment, meeting essential proof of concept requirements.
• Can it be a product? (TRL 7+): This final stage focuses on demonstrating scalability, reliability, and a viable path to manufacturing.

The reality for most pre-seed to Series B startups is pragmatic. You must show just enough evidence to de-risk the next stage of development. For a pre-seed round, compelling data from a well-designed experiment is often sufficient. By Series A, investors will expect to see a working prototype that achieves key performance benchmarks. The key is to frame your progress using these three simple questions, demonstrating you understand what it takes to move from science to product.

Building a Moat: Startup IP Protection and Assessment

For deeptech companies, your intellectual property is not just a legal asset; it is the foundation of your long-term value. Investors need to see a clear, defensible moat. Effective startup IP protection is about taking stage-appropriate steps, not attempting to solve every potential legal issue before you are funded.

At the pre-seed and seed stages, the focus is on "clean IP." This means proving undisputed ownership of all relevant intellectual property. Investors often walk away from deals with ambiguous ownership trails from universities or previous employers. Before you speak to a lawyer, conduct an internal audit and use tools like Google Patents to understand the existing landscape.

To ensure your IP is clean, ask the following questions:

• Did all contributing founders and employees sign IP assignment agreements?
• Was any foundational work developed using another institution's resources, such as a university lab? If so, is the licensing agreement clear and exclusive?
• Are there any consultants or contractors who contributed? Do you have signed agreements clarifying that the company owns their work product?
• Have you documented the conception of your key inventions in dated lab notebooks or other formal records?

As you mature to Series A or B, investor expectations escalate. They will expect to see non-provisional patent applications filed in key jurisdictions. They will also likely commission a formal Freedom-to-Operate (FTO) analysis, which assesses the risk that your product might infringe on a competitor's patents. While a full legal FTO is expensive, early-stage founders can demonstrate strategic thinking by mapping their core technology against competitors' patents. This proactive approach to technical risk evaluation builds significant investor confidence.

The Investor-Ready Roadmap: Answering Deeptech Investor Questions

The most common mistake founders make is presenting a complex R&D plan filled with technical milestones. While these are critical for your team, investors fund value inflection points. A technical milestone is an achievement, like completing an experiment. A value inflection point is when that achievement materially de-risks the business, increases its value, and opens new strategic opportunities.

Translating your roadmap is essential. You must frame every technical achievement in terms of the business value it unlocks. Consider this example from a biotech company developing a new antibody discovery platform.

Technical Milestone: "Develop a proprietary cell line that increases protein expression by 200%."

Value Inflection Point: "The new cell line reduces the time to identify a viable drug candidate from six months to six weeks. This unlocks the ability to pursue three concurrent discovery programs instead of one, making the company an attractive platform partner for large pharmaceutical firms."

The second version connects the technical achievement directly to business value, justifying the capital you are raising. Your use-of-funds slide should articulate how this capital will get the company to the next value inflection point. This narrative directly addresses deeptech investor questions about the return on their capital.

This approach also provides a powerful framework for communicating risk. Instead of hiding challenges, present a roadmap that acknowledges them. For example: "Our primary technical risk is scaling the manufacturing process. We have allocated $500,000 of this round to resolve this by Q4. Success here represents our next major value inflection point." This transparency builds credibility and shows you are managing the entire venture, not just the science.

Your Technical Due Diligence Checklist for Deeptech Startups

Technical due diligence is a conversation designed to build conviction. To prepare effectively, focus on translating your internal reality into a narrative that investors can understand and underwrite. It is not about having all the answers, but about showing you have a credible plan for finding them. The most successful founders guide investors through their technology with a clear and compelling story.

To strengthen your position ahead of your next fundraise, focus on these three practical actions:

1. Re-frame your technical proof. Shift your focus from TRLs to the core questions investors ask. Organize your data, prototypes, and validation metrics to directly answer: Does the science work? Does the technology work? Can it become a product?
2. Conduct an internal IP audit. Use the checklist provided earlier to ensure your ownership is unambiguous. A clean IP history is a non-negotiable prerequisite for investment at any stage.
3. Map milestones to value inflection points. Review your R&D roadmap. For each technical milestone, articulate how it de-risks the business or opens new commercial opportunities. This will transform your financial ask from a list of costs into an investment in value creation.

See the investor due diligence hub for broader materials.