Funding Readiness Level: How This Tool Can Help You Secure Investment

Few tools measuring a concept’s developmental process have proved to be as successful as the KTH Innovation Readiness Level™. Established by Sweden’s KTH Royal Institute of Technology, this model employs a measure of ‘readiness’ across six different criteria – ‘customer’, ‘technology’, ‘business model’, ‘IPR’, ‘team’, and ‘funding’ – to provide users with a fair and visual representation of their innovation’s progress.

The KTH Innovation Readiness Level works by giving these six criteria a ‘score’ between 1 and 9 (1 being the least developed). This can be done by looking through the milestones and checkpoints associated with each level and finding the one that best describes your project’s status.

Often, academic innovators mistakenly focus their efforts on just a single element of this tool – the Technology Readiness Level (TRL). Whilst this is key in helping users develop and test their innovation from a purely technological perspective, there’s a lot more that goes into making an idea market-ready.

For this reason, we will now explore the concept of Funding Readiness, an often-overlooked element of the KTH Innovation Readiness framework that guides its users on their journey to secure the necessary funding to take their idea to market.

What is the Funding Readiness Level?

The starting point for FRL, i.e. FRL 1, describes a reality faced by innovators far and wide throughout the early stages of their project’s development, wherein a somewhat unclear initial business idea is in place and not much is known about the project’s funding needs and options.

Over time, this scale seeks to take users all the way to FRL 9, which describes a situation wherein vital investment has been obtained and ‘additional investment needs and options are continuously considered’.

Doing so, however, requires users to put in plenty of time and effort in working on their pitch deck, developing a concrete business plan, creating a unified team, and keeping tabs on all necessary documentation, amongst other things. Over time, this will see the innovation climb the ranks of the Funding Readiness Level.

With that being said, here’s a representation of all nine levels in the FRL scale:

A graphical interpretation of the FRL scale. The text for this graphic was adapted from The KTH Innovation Readiness Level™ Model.

Where do I fall on the Funding Readiness Level Scale?

Once a solid understanding of funding readiness is obtained, the next step is to identify where you and your project fall on the FRL scale.

Being aware of the Funding Readiness Level of your research project, spin-off or startup company allows you to focus your efforts on those areas which may be lacking, thus paving a clear path to moving further up the scale and obtaining the necessary funding.

One way of identifying where you stand in terms of funding readiness is by creating a checklist that clearly lists the key funding-related milestones that one needs to reach.

The following questions are here to help you gauge which key elements of funding readiness require more attention, to take your project or business forward. After going through the below questions, feel free to take another look at the FRL scale above to confidently define your project’s Funding Readiness Level.

How can I improve my Funding Readiness Level?

In the unlikely event that you’re already at FRL 9 (in which case, congratulations!), you might want to consider adopting a number of good practices which will both directly and indirectly help you on your journey to the top of the Funding Readiness Level.

Think like an investor

Developing a pitch or presentation for the first time may prove to be rather challenging – mainly because the content that interests potential investors is entirely different to what might interest a research collaborator or colleague.

In order to impress investors, it is of paramount importance that you understand what it is that they’re looking for. First and foremost, confirm that the project at hand falls within the investor’s investment mandate and try to gauge why said investor might be interested in investing in your idea.

Once you secure an investor’s interest, keep negotiations somewhat flexible, so that the prospective deal serves to benefit both parties.

As exciting as it might be to approach the first investor that expresses interest in your idea, it is key to keep your options open and gauge what other interested parties can bring to the table. This can give you some leverage when negotiating a deal.

Brush up on your pitching skills

You might be working on a downright revolutionary project that can positively impact people’s lives for years to come – but if you can’t successfully communicate that value to interested parties, getting your project on its feet will prove to be an unnecessarily long and arduous feat.

When pitching to investors, the years of hard work you’ve put into your project will be condensed into a handful of slides and a quick oral pitch, so it’s vital that you make the most out of the given time and resources.

Get extremely familiar with your pitch deck, so much so that you can deliver your presentation without relying on your written notes. It’s also beneficial to include graphics within your presentation in a bid to keep your audience engaged and demonstrate your concepts in a visual manner.

Given the extreme time constraints that often come with pitching your project, it’s best to have a maximum of two representatives present.

Get comfortable with delegating work

It’s easy to get caught up in your company / research project’s day-to-day operations. Doing so exclusively, however, will prevent you from working on your project and developing it further from a strategic standpoint.

An essential part of growing your project is bringing in a team of hardworking individuals who you can trust with handling day-to-day matters. Not only will this benefit you down the line, when you’re required to create a concrete corporate structure, but it will also free up precious time which can be used to move the project forward.

Use this time to focus on business development, work on your project’s value proposition, and practice your pitching skills.

Prepare for the due diligence check

In touch with an interested investor? That’s great news! Chances are you’re within arm’s reach of securing some well-deserved funding – but it’s not over yet. 

Before going through with an investment, investors tend to perform a due diligence check, through which they confirm that the research project / company at hand is, in fact, compliant and capable of following through with its promises.

Provided that the necessary checks and balances were employed and maintained throughout the project’s lifetime, this final hurdle shouldn’t be particularly concerning, although there are a few things you can do to make this process as smooth-sailing as possible.

• Keep key documents, such as annual financial statements, handy at all times, so that you can present them at a moment’s notice. 

• Make sure that your management team is experienced and capable of leading your employees.

• Make sure the project can handle the forecasted expansion.

Feeling stuck?

Finding and securing the right funding for your research project is no easy feat. Luckily, this happens to be one of our areas of expertise here at Deep Tech Foundry.

With years of experience in helping startups and research projects take their ideas to market under our belt, we’re more than qualified to help you wade through the funding ecosystem. 

So, if you and your project are looking to identify private, public, or hybrid sources of funding or just need that extra push to secure said funding, drop us a message to book a free consultation session and visit our portfolio page to learn more about our successful projects.