From Grants to Growth Capital: The Transition That Trips Most DeepTech Founders

“Our innovation has been published in three journals and funded by two top research agencies. Why didn’t the VC see its potential?”

I hear this a lot at SanchiConnect. The DeepTech ecosystem in India is growing quickly, but there is still a big problem: moving from public capital that doesn’t dilute to private venture capital. There are a lot of mistakes that happen during this leap, and founders often don’t see them until it’s too late. This piece of work will look at the five most common mistakes DeepTech founders make during this important transition from both a product and a psychological point of view. I will also show these points with a real-life example.

Grants and VC Capital: What You Need to Know About the Main Differences

Grants mostly support basic research and technical exploration, with a focus on:

• Depth of R&D
• TRL Progress
• Publications
• IP Generation 

Venture Capital, on the other hand, goes after high-risk business ventures and rewards them with:

• Timing the Market
• Team Resilience 
• Distribution Plan
• Speed to Grow

Founders who switch between these funding models need to change their story, way of thinking, and metrics to get investors interested, even if they are making groundbreaking innovations.

Let’s use a case study to help us understand this better

Startup: Biocense Technologies

Innovation: A blood glucose patch that doesn’t hurt you and uses nanosensor technology.

Status: TRL 6, with money from BIRAC and ICMR.

The Hiccup: Biocense showed private investors a 20-slide technical deck that didn’t have any important business parts, like clinical pilots, go-to-market partnerships or a pricing hypothesis.

Their pitch was mostly about how precise and accurate their sensors were, and they didn’t talk about:

• Roadmap for regulations
• Prices that are competitive with CGMs
• Models for paying back
• Partnerships between hospitals and insurers

Three VCs turned down the chance to invest, even though the company had a great track record of innovation and funding from grants.

It was clear why: their business model was still just a research hypothesis.

Top 5 Mistakes DeepTech Founders Make (and How to Fix Them)

Mixing up Proof of Concept and Proof of Market

Grants show that a lab is making progress, but VCs want to see proof in the real world. DeepTech Founders often show off prototypes even when there isn’t a clear market need for them.

Solution:

• Do small-scale tests with hospitals, OEMs, or the government.
• Get Letters of Intent (LOIs) or MoUs.
• Show even a little bit of revenue or partnership traction.

In Biocense’s case, a ₹50L pilot with a mid-tier hospital chain could have made investors feel a lot better about the company.

Putting science ahead of strategy

Founders often go into too much detail about technical specs, which takes away from the business story.Venture capitalists put money into a business, not just a technology.

Solution:

• Break up your pitch deck: Set aside two slides for the Tech Stack and five or more for the Market Stack.
• From the start, focus on unit economics and the size of the market.
• Don’t use too much jargon or depend too much on academic papers.

Not taking into account differences in time horizons

Grants usually give researchers 3 to 5 years to work on new medical technologies.Venture capitalists, on the other hand, want to see progress within 12 to 24 months of making an investment.Without a way to make money, a technology that takes six years to mature is usually not a good investment for a VC unless there is a plan to get it to market soon.

Solution: 

• Find nearby markets to speed up the deployment of technology.
• Start with a cheap MVP for a use case that is easy to understand.
• Make money from services or consulting to show that your business can work.

For example, Biocense could have looked into selling diagnostic kits for use by veterinarians (less regulation, faster revenue) while also getting ready for clinical markets.

Keeping a Conservative Risk Appetite

Founders who get grants are used to having structured timelines, low-pressure execution, and academic review.On the other hand, VCs work quickly and expect founders to make quick decisions, test their ideas, and change quickly.A lot of DeepTech teams fail because they wait for “perfect data.”

Solution: 

• Use a “build-measure-learn” cycle that goes around and around.
• Make quick guesses based on data.
• Get used to not knowing everything; VCs pay for learning curves.

Not taking care of emotional repositioning

It can be hard to adjust when you go from a grant ecosystem to a competitive private capital market.

• DeepTech Founders are asked more direct questions.
• Rejections happen a lot and don’t always make sense.
• The job changes from “engineer” to “evangelist.”

A common problem is the mental shift from “researcher” to “CEO.”

Solution: 

• Get advice from people who have successfully made this change.
• Sign up for DeepTech accelerators like SanchiAccel that put a lot of emphasis on both the product and the founder being ready.
• Improve your storytelling skills; both the data and the story are important.

Conclusion

It is hard but necessary to connect scientific innovation with business sense. DeepTech is a big chance for India to create IP-led companies that can compete with companies around the world.This can only happen if founders are given the power to work with the way private capital works. At SanchiConnect, we are committed to this mission, assisting over 3,000 DeepTech startups not only in building what matters but also in selling what scales.

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