Turn science into fundable traction for seed using TRLs, third-party validation, design-partner proof, and a crisp proof-pack/data room. MedTech overlay included.
1. What Counts as Traction for a Deep Tech Startup
Traction is not revenue alone.
In deep tech, early traction is a chain of de-risking milestones that systematically reduce technical, market, and execution risk. Unlike software startups that can point to user growth or monthly recurring revenue, deep tech progress is measured by how effectively you're eliminating the reasons investors might say no.
Signals investors take seriously:
- Technical: Reproducible experimental data with error bars, third-party validation from recognised labs or institutions, performance metrics benchmarked against incumbent solutions or theoretical limits, peer-reviewed publications, working prototypes that demonstrate core physics/chemistry (even if not optimised), and patent filings that show defensible IP positions.
- Market: Design partners who commit engineering resources to integration, LOIs that specify quantities and target pricing, MOUs with strategic value beyond mere interest, paid pilot programmes or feasibility studies (even small ones validate willingness to pay), endorsements from recognised KOLs in your field, and evidence of regulatory pathway understanding where applicable.
- Execution: Detailed technical roadmap with quantified milestones and decision gates, transparent budget allocation showing how capital extends runway to value inflection points, team with complementary skills (technical founder + commercial ambition, even if unproved), successful grant applications (validates peer review of science), supply chain partnerships or manufacturing relationships already engaged, and evidence of capital efficiency from previous funding.
Investor rule of thumb: If achieving a milestone makes your next funding round materially more likely at 2-3x the valuation, it's traction worth highlighting. Each milestone should answer a fundamental question about why your venture might fail—and prove that it won't.
2. Technology Readiness Levels (TRLs) explained
TRLs help translate lab progress into a common language investors can understand. Here is a break down of the most relevant TRLs for those raising their seed round. You technology should be somewhere along this spectrum if you are raising you are a deep tech startup raising your seed round:
TRL | Plain English | Evidence investors expect | Example: Medical Device | Example: Metal Extraction |
3 | Principle shown | Experiments confirm the effect beyond theory or simulation; methods recorded; early stats, not anecdotes | Novel biosensor material shows selective binding to target biomarker in buffer solutions with quantified response curves | New solvent system demonstrates 95% extraction efficiency for lithium from brine samples in lab glassware |
4 | Lab validation of components | Reproducible results with controls; comparison to a named benchmark; draft verification plan | Biosensor chip maintains sensitivity across temperature ranges, outperforms current gold standard by 3x in side-by-side testing | Extraction process works consistently across different brine compositions with recovery rates benchmarked against current methods |
5 | Prototype validation in relevant lab environment | Working bench prototype; third-party test or witnessed test; beginning reliability/variability data | Working sensor array processes real patient samples, validated by independent lab using standard clinical protocols | Pilot extraction unit processes 10L/day of actual mine wastewater with third-party verification of metal recovery and waste stream purity |
When raising a deep tech seed round, typically you’re going to be focussed on showing where you are from TRL 3 → 5. This is essentially going from science to engineering risk. Each subsequent round of financing should move you 1-2 TRL levels forward.
Why it matters: TRL 3–4 is feasibility and still risky. TRL 5 is the moment most seed investors lean in. When there is material market risk as well as technology risk, this often goes up to TRL 7 because the investor is not wanting to buy both the technical risk and the market risk associated with the approach
TRL Translation Reference Guide
Use this as a common language with investors. You should adapt the wording to your domain.
TRL | What it means | Typical evidence & artefacts | Gate to next level | Example milestone |
1 | Basic principles observed | Literature survey, hypothesis, back-of-envelope calculations, first models | Hypothesis with measurable predictions and target metrics | Concept note with initial physics/chemistry model |
2 | Application conceived | Concept formulated, block diagrams, materials/architecture choices, analytical model | Identify critical functions, key risks, and benchmark to beat | Architecture sketch with performance targets vs incumbent |
3 | Experimental proof of concept | Bench experiments show effect beyond theory/sim; lab notebook, early stats; methods captured | Repeatability with controls; protocol locked | Small rig shows 3× improvement on named benchmark in controlled test |
4 | Component/breadboard validated in lab | Reproducible component tests; interface definitions; draft verification plan | Verification plan approved; comparison to benchmark; initial reliability snapshot | Sub-component meets spec across n≥3 runs with error bars |
5 | Prototype validated in relevant lab environment | Integrated bench prototype; third-party or witnessed test; variability and drift measured | External report complete; risks retired to pilot plan | Independent lab confirms performance; pre-pilot checklist ready |
6 | System/subsystem demo in relevant environment | Integrated prototype exercised under relevant conditions; limited-duration field test | Reliability and safety good enough for pilot; pilot site and objectives agreed | Containerised demo at partner site with data logging |
7 | System prototype in operational environment | Pilot with real users; design frozen for production intent; reliability dataset | Design freeze; supply chain and regulatory path de-risked | 500–1,000 hours runtime; pilot KPIs met; on-ramp to purchase order |
8 | Actual system completed and qualified | Compliance and certification testing; process validation; PVT builds; yield data | Launch readiness: manufacturing, quality, labelling, support | CE/UL certification; validated line at target yield and cost |
9 | Proven in routine operation | Commercial deployments; post-market surveillance; field performance | Stable performance and economics at scale | Fleet reliability and unit economics meet targets for >2 quarters |
Further notes on TRLs
- Often times your innovation will be the lowest TRL part of a more mature system. Make sure you investors understand where the technology risk resides (i.e. what is the lowest TRL part of the system)
- The bigger and easier your market opportunity is, the more technology risk the investor can afford to take. If the end market is energy generation you can support a lower TRL than if your application is in Defense.
Full TRL Reference (Click to Expand)
Learn More:
- https://www.nasa.gov/directorates/somd/space-communications-navigation-program/technology-readiness-levels/
- https://www.nasa.gov/aeronautics/technology-readiness-levels-demystified/
3. Founder ↔ Investor Translation Table
When engaging with investors, it's crucial to understand how your achievements translate into investment signals. Scientists and engineers often undersell their progress by focusing on technical details rather than risk reduction. Remember: investors are pattern-matching against successful deep tech ventures they've seen before.
Here's how to bridge that communication gap:
Founder milestone | What a VC actually hears |
Filed invention disclosure, provisional patent, assignment from TTO (Technology Transfer Office) | IP is likely investable and ownable; a defensible moat may exist; freedom to operate (FTO) can be assessed; university won't create complications at exit |
Feasibility experiments replicated; TRL 3–4 achieved | Science works beyond the paper; risk moves from "is it real" to "can it scale and who cares"; founder can execute beyond academic environment |
Bench prototype at TRL 5; independent test (e.g., Callaghan Innovation or university lab) | Performance metrics are credible; team can execute outside a single lab; third-party validation reduces diligence burden; focus can shift to market and manufacturing |
MOU/LOI with named design partner; pilot scoped with objectives and success criteria | There is market pull not technology push; a real buyer is engaged; pilot data can justify next round valuation; clear path to design wins and revenue |
Team: named scientific lead, clear commercial lead; advisors with domain credibility | Balanced team reduces execution risk; key people committing full-time shows traction of mission with talent; advisors can open doors and validate approach |
Capital plan with staged milestones and go/no-go gates | Use of funds is disciplined; risk will fall in measurable steps; future investors can underwrite progress; founders understand the venture game |
Grant funding secured (Callaghan, MBIE, etc.); partnerships with CRIs | External validation of science and commercial potential; non-dilutive capital extends runway; access to infrastructure and expertise without capex |
Unit economics modelled; pathway to target COGS identified | Founders understand business fundamentals beyond the science; manufacturing isn't an afterthought; gross margins will eventually support a venture-scale business |
4. MedTech Overlay: Clinical, Regulatory, Manufacturing, Quality
Medical devices are more complex; progress maps to TRLs but you need to be able to talk about four other risks tracks in parallel:
- CRL (Clinical Readiness): intended use, Target Product Profile (TPP), study plans, access to trial sites and Key Opinion Leaders (KOLs).
- RRL (Regulatory Readiness): classification and pathway (e.g., US 510(k), De Novo, PMA; EU MDR classes), pre-submission strategy, ethics or Investigational Device Exemption (IDE) needs.
- MRL (Manufacturing Readiness Level): design for manufacture (DFM), supplier selection, EVT/DVT/PVT builds.
- QMS (Quality Management System): ISO 13485 trajectory; risk management to ISO 14971; human factors per IEC 62366; for Software as a Medical Device (SaMD) follow IEC 62304 and cybersecurity guidance etc.
Bonus: Five Critical Contemplations for MedTech Founders
These readiness levels can be roughly aligned with an equivalent TRL though a company may be at different stages through each class of readiness:
TRL | Technology | Clinical | Regulatory | Quality |
1-2 | Concept, mechanism | Unmet clinical need and intended use described | Draft classification hypothesis | Start ISO 14971 thinking |
3 | Bench feasibility | TPP drafted; KOL feedback captured | Predicate scan or novelty rationale; pre-sub questions listed | Formative human factors plan |
4 | Lab prototype; early V&V plan | Usability work; diagnostics: analytical plan | Pre-sub strategy; ethics/IDE planning | Make/buy choices; pre-compliance checks |
5 | Engineering prototype | Feasibility protocol ready; sites identified | Pre-sub or Scientific Advice booked | QMS plan; suppliers identified |
6 | Relevant-environment prototype | First-in-human or clinical performance study starts | Ethics and IDE approvals as needed | EVT builds; process characterisation |
7 | Design-frozen system | Pivotal study enrolling or complete | Dossier compilation for 510(k)/De Novo/PMA or EU CE | DVT builds; process validation plan; DHF (Design History File) near complete |
8 | System complete and qualified through operational testing | Post-market surveillance initiated; real-world evidence collection | Market authorisation granted; post-market commitments active | Commercial manufacturing validated; supply chain qualified |
9 | Actual system proven in operational environment | Established clinical outcomes data; health economics evidence | Routine regulatory maintenance; expansion approvals as needed | Full commercial operations; continuous improvement processes |
Outset Ventures — Launchpad for NZ’s Deep Tech Startups
outset.ventures
Outset Ventures offers specialised lab and prototyping facilities for deep-tech and hardware startups, alongside early- to growth-stage investment for science-led ventures. Founded by the first wave of Kiwi innovators in deep tech. Founders can access physical infrastructure, expert support, and capital under one roof, making it a launchpad for NZ-based deep tech startups.
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Part 2- Patents & IP — Think Globally from Day One
Part 4: Showing Traction & Preparing for the Fundraise
