Navigating Investor Relations in Deep Tech Startups

In the world of deep tech startups, traditional funding strategies often fall short. CleanJoule, a sustainable aviation fuel producer, offers valuable lessons in navigating these complex waters. CEO Mukund Karanjikar shares insights on deep tech investing, highlighting the crucial role of strategic partnerships and long-term funding strategies.

The Long Game of Deep Tech

Deep tech ventures operate on a different timeline than typical startups. Karanjikar is candid about this reality: “Start with sequestering 20 years of your life if you’re not prepared to do that. I would think twice and three times and four times.” This long-term perspective is crucial for both entrepreneurs and investors in the deep tech space.

Rethinking Venture Capital

Contrary to Silicon Valley wisdom, Karanjikar advises caution with traditional VC funding. “Skip the standard venture capital investment all along, forget about that, because they are not going to be your friends in the journey to come,” he warns. The mismatch between typical VC timelines and deep tech development cycles can create tension and misaligned incentives.

Strategic Partnerships: The Deep Tech Difference

Instead of relying solely on VCs, CleanJoule has cultivated strategic partnerships within their industry. Karanjikar explains, “We have three different airlines… Volaris, Frontier and viz, headquartered in three different countries.”

These partnerships go beyond typical customer relationships. “Not only our airlines gave us what we call offtake agreements, meaning they agreed to buy large volume of what we produce at a future date. They also participated in our series a strategic investment raise,” Karanjikar reveals. This approach aligns investor interests with the company’s long-term goals and industry focus.

Diversifying Funding Sources

CleanJoule’s funding strategy demonstrates the importance of diversification in deep tech. Their recent funding round was led by Indigo Partners, a prominent player in aviation. “The funding round was led by Indigo Partners out of Arizona. They are a very prolific player in aviation,” Karanjikar notes. They also secured investments from Gen Zero, “which is climate tech investment arm, sustainability based, focused investment arm of Temasek, the fund out of Singapore,” and Clean Hill Partners, “whose whole objective is decarbonization investment.”

This mix of industry-specific, sustainability-focused, and specialized investors provides a robust foundation for long-term growth.

Government Funding: A Critical Piece of the Puzzle

For many deep tech startups, government contracts and grants play a crucial role. Karanjikar shares, “We happen to be lucky in that way. The mousetrap we chose to work on happened to be so relevant for the US government that they literally almost undertook all our development from 2009 to 2023.”

However, he cautions that securing government funding requires patience and persistence. “You may have the next best idea after sliced bread, as it is proverbially known in my world, but it is still the next best idea. It wasn’t what’s in the practice.”

Building Investor Relationships for the Long Haul

In deep tech, investor relations extend far beyond quarterly reports. Karanjikar emphasizes the importance of finding investors who understand the long-term nature of deep tech innovation. “Money raising is not a reflective exercise. It’s very prosperous. It’s what you raise it for, what you need to do in the future,” he notes.

This forward-looking approach requires constant communication and alignment between the company and its investors. It’s about building a shared vision for the future, not just meeting short-term metrics.

The Path Forward

Navigating investor relations in deep tech startups requires a unique approach. It’s about finding partners who share your long-term vision, diversifying funding sources, and maintaining clear communication throughout the extended development process.

As CleanJoule’s experience shows, success in deep tech investing isn’t just about the money—it’s about building a network of support that can sustain innovation over decades. For entrepreneurs and investors willing to play the long game, the potential rewards of deep tech are immense, offering the chance to reshape industries and address global challenges.