You must focus on your offtakers!

This week I met with the C-suite of a client of ours (an ESS startup) and discussed their progress, particularly relating to scaling their technology.

One topic that was touched on was around Financing. Our client, like many cleantech startups, have faced a very tough, uncompromising fundraising climate this past 12 months. VCs risk appetite for early-stage product startups has dropped, and it's meant startup leaders have had to not only be creative, and work extra hard when working on funding but also pass more rigorous due diligence. 

Capital is no doubt there but there are now so many more hoops to jump through to secure it, and there will be some inevitable casualties amongst the cleantech startup community.  

One thing our client has done brilliantly to boost their attractiveness is complete some successful early-stage demonstrator and pilot projects with some key industrial partners, to showcase what their systems can achieve. This also feeds into their strategy of exploring investment from these large industrial offtakers in the long-term. With such a partner, you can gain strong market notoriety but also access to significant capital deployment!

This article from Sifted gives a great insight how incredibly important it is for FOAK startups to secure credible offtakers for their products / systems to boost investor confidence. Without demonstrating you have real, commercial viability in the market, why would an investor choose to back you? Effectively, without offtakers you don't have a product, you have a concept. 

In the article, it explores the value of focusing on offtakers (ultimately your future customers) from day one. If you understand the challenges they face, then you can ensure you're offering a solution for them and this early feedback provides that vital product-market fit that futureproofs your startup. Its important for leaders to push for early demonstrator / pilot projects like our client has, and also to explore a diverse mix of offtakers (different company types, different countries/continents etc) or even a pool of offtakers as outlined in the piece. 

I love the final line here from Sarah Söding of Extantia:

“Offtakers need to realise that they’re the solution. The more widely a technology is deployed, the cheaper it becomes, because companies can iterate. Incumbents can allow that learning curve to happen, driving down price. Industrial incumbents have the mandate to help bridge the gap from uncompetitive climate techs to on a par with fossil fuels.” 

If you're leading a cleantech hardware startup / scaleup, think about your offtakers. Have you demonstrated the true commercial viability of your offering? If not, it could really hamper your chances of securing scale-up capital. 

For 10 years, Hyperion had supported cleantech startups and scaleups to land the best leadership talent to help take them through to commercialisation. We understand what works and what doesn't in the scaling phases and the DNA needed in these individuals. If you're looking at leadership hiring and need support, then contact me at david.beeston@hyperionsearch.com