What's the key to growth for pre-seed Climate Techs?

In a nutshell:

In the beginning, focus on learning before growing; not on getting funding to build.

In the next few weeks, Climate Salad's inaugural Climate Tech Industry Report will hit the streets.

The report aims to:

• Help climate tech entrepreneurs understand the industry and where they fit.
• Help investors get excited by the strength, depth, breadth and opportunity.
• Help corporates, government, media and others globally understand our potential.

As a sponsor of the report, I was asked to contribute with a point of view on the topic of growth.

The preliminary results of the survey suggest that most Aussie Climate Techs are in the pre-seed stage with less than $100k in annual revenue. At this stage, it is critical for them to focus on discovering what customers actually want and prioritise learning over sales. They often don't have a product to sell, so they need to learn what to build before they commit the resources to build. They should also focus on proving that there is demand (using data & insights) for their value proposition before building a product.

Unfortunately, this has not been what I've observed from mentoring a few Climate Techs over the past year. As is the case with many pre-seed, low revenue startups; they already started building a product and are now trying to figure out a path to the customer.

I've found many of them do not have a clear idea of the behaviours and attributes that define their customer and make the mistake of defining their customer segment too broadly in hopes of keeping the addressable market large. The unintended consequence is that they become "all things to all people" and as a result, have an unclear value proposition. 

It's a "chicken and egg" situation: 

• without a clear target customer, the value proposition is unclear
• with an unclear value proposition, conversion and traction metrics are weak
• without decent metrics, it's hard to raise funds (unless your investor is a gambler)
• without the funds, they can't grow and scale
• if we don't scale climate tech solutions, we won't remove GHG
• we don't have time to build climate techs that nobody wants

So here is what we can do about it:

1) Know your customer

Define the different types and flavours of customers you can think of. Think about behaviours, not just demographics. If you had a chance to speak to your perfect/ideal customer, what would they look like? How do you pick them apart from others like them? Write this down.

Prioritise, at most, two different customer segments. You only have limited capacity, so you need to prioritise so that you can focus and get $hit done.

I cover this in a webinar I ran a few weeks ago where I unpacked Aussie Climate Tech startup plicoenergy.com.au to show you how you can test an idea and prove demand before you actually build the product.

Here is the replay: 

You can access the Miro board used during the webinar here  miro.com/app/board/uXjVO8WEUxg=/

2) Define your value proposition

Define a value proposition for each customer segment.

In last week's podcast, I spoke with Adrian Stewart from Scale Messaging who gave me a masterclass on how to think about messaging and value propositions. He has a pretty good framework that makes it simpler than it sounds.

The key here is to focus on being clear over being clever. So don't try and come up with a catchy tagline in one go. Unpack what you want to communicate (the value proposition) by helping your customers address these points

• I don't understand it: What is it? What's included? How does it work?
• I don't want it: What are your customer's motivations? Why should they care? What's in it for them? What are the benefits?
• I don't want it from you: Why should they choose you?
• I don't trust you: Why should they trust you? How can they believe your claims?

3) Test before you build

With a clearer customer and value proposition, you can now put these to the test. It's easier than ever to do this, and you don't have to be a marketer or developer to pull it off.

Here are a few ideas to test your customer segment and value prop. Don't just run a survey and think you nailed it. Make sure you include at least a few, real, one-on-one customer conversations.

👉 Talk to prospective customers about their past problems (create a small pitch deck)
👉 Contact businesses who need your product and interview them (Pitch on Linkedin)
👉 Create a landing page to funnel traffic to gauge interest (use Social Media ads + HubSpot or InstaPage to build the landing page)
👉 Build a survey for your customers and collect insights (Google Forms or TypeForm)

That should get you on a better path to obtaining the traction metrics and proof that investors ask for before they open their purse strings.

As always, I'm happy to chat, so don't be shy and get in touch!