Crossing the Valley of Death in NPD
The Valley of Death. This sinister sounding metaphor is often used in the context of commercialization of technological research. Bridging The Valley of Death is one of the biggest challenges for science and technology startups. It’s also a big time innovation killer.
Example – a startup sprouts when a promising new technology is developed at TU Delft. Everybody is enthusiastic and agrees that a great future is ahead for this new technology. Soon however the harsh reality checks in. It turns out that the development of the perfect consumer product requires enormous amounts of funding. Unfortunately, funding a business without a working product (and thus without revenue streams) is not something most VC’s are very keen on. Before you know, the once so enthusiastic startup finds itself in a seemingly hopeless situation. As its name suggests and however unfortunate it may be, not all young companies manage to cross the valley towards profitability.
The concept of being underfunded at early stages of development is not only a problem in the high-tech world. At TOP, we regularly deal with it in the realms of new product development (NPD). NPD always starts as a small kitchen concept that has not yet proven itself in the market. However the resources to produce the product on a large scale are often not available. Even for multinationals this is a challenge – their factories are designed to run 24/7 and as efficiently as possible. Trying a fun and exciting new product that might very well fail is often considered to be too risky to make it worthwhile. The launch of a new product hence goes paired with large investment costs, which very often makes the associated risk too high. The inevitable result is that most new concepts never become an actual product.
So what can we do to prevent this? For startups there’s of course the possibility to run a crowdfunding campaign. There are even platforms like Crowdfooding and fundafeast that specialize in crowdfunding for food startups. If the intensive marketing campaign required is too time constraining however, there are also other ways to bridge the valley.
The alternative approach is to get a very early prototype in the market as fast as possible. You can do this with a less than perfect product – a ± 80% finished version will do. With this prototype, you can get a feel for market interest, convince investors and gain publicity. A bonus of going through this process is that your startup becomes more agile in anticipating market preferences. The iterative process will help keep risks low while developing the best possible product. This method feels scary at first and is at odds with the scientific method, which is why it’s often hard for scientist to really accept this approach. In that sense, the valley is perhaps not only a funding hurdle, but also a mental hurdle one has to overcome.
The practice of prototyping and trial-production is one of TOP’s main expertises. For food related concepts we use our FoodLab to do this. In our facility, all equipment necessary to run a first trial production is available. By making the FoodLab freely accessible for all of our clients, we hope to facilitate the production of prototypes of many more innovative products. This, combined with the guidance during the initial launch that TOP can offer, will help many good ideas bridge the dreaded valley of death. If you have a great idea and want to join our journey – pick up your phone and give us a call. Talk to you soon!
Nick van Lanen