How we pivoted our deep tech startup to become a SaaS company
For the foreseeable future, global markets will require billions of highly specialized electric machines that perform much better than the inefficient relics of the past.
Initially, we approached this as a hardware challenge until we determined that the key to meeting next-generation electric motor demand actually lies in software. That’s why we’ve pivoted to a SaaS model.
Like any major startup redirect, there were several “a-ha!” realizations, accompanied by trials to make it all work. Fortunately, the SaaS direction has delivered upsides: We’ve achieved relatively strong product-market fit and cash flow-positive status without big VC raises or burn rates.
The process wasn’t precisely linear, but (looking back) we did four core things to conclude SaaS was our model:
Assessed what was truly disruptive, scalable and profitable about our technology.
Engaged our board and investors candidly.
Studied global markets and tech trends.
Took our MVP to market quickly, opting to polish in public rather than perfect in private.
Pivoting from hardware to SaaS was the right move for our electric motor design startup, but the process wasn’t precisely linear.
ECM PCB Stator Technology was founded on the innovation of MIT-trained electrical and software engineer Dr. Steven Shaw, our chief scientist. After launch, we began developing proprietary printed circuit board stators that replace bulky copper windings — the central component in electric motors — and using in-house software to make them lighter, faster and more efficient machines.
Two years later, I joined as a growth-stage CEO after leading two energy technology companies to scale and acquisition. At that point, we were still at a relatively early stage in funding and product-market fit. The startup had raised a venture round and was flirting with becoming an axial flux electric motor manufacturing company. The initial impetus for a SaaS shift came when I began to assess the company with fresh eyes and engage Steve and the board on our inherent advantages and path to profitability.
At that point, we also pulled in some new investors.
On a macro level, we conferred to determine our competitive advantages and addressable market. An early observation was that there were already several large, established players making off-the-shelf electric motors. An assessment of global trends (e.g., mass electrification, automation, reducing carbon emissions) also revealed that the need and requirements for next-generation electric machines were rapidly shifting.
After plenty of analysis and a number of board meetings, this appraisal emerged: The global marketplace will require more efficient, better performing and custom-designed electric motors that can be produced in the hundreds of millions in a more sustainable way.
With that in mind, I turned to Steve and our board to evaluate the best business model. We concluded that the most competitive aspect was the ability to leverage printed circuit boards via “motor CAD” software to create bespoke electric motor designs that require less raw material and outperform legacy offerings.
Then we addressed a critical question: How can we take this technology to market rapidly with a favorable capex profile?
How we pivoted our deep tech startup to become a SaaS company by Ram Iyer originally published on TechCrunch