Rahul Rana grew up around Bell Labs, wrote a book about frontier startups while still in college, and then helped incubate a biotech lab. He now makes a simple case: more founders should try the seemingly impossible.
In this episode the author of Building Moonshot Companies explains what makes a moonshot, how deep tech investors evaluate early companies and why storytelling is a founder superpower.
What is a moonshot company? Rahul Rana’s core thesis
Rahul defines a moonshot company by three ingredients: a scientific or technological breakthrough, a big problem solved and a strong business at the core. These are venture-scale businesses, not science projects or charity.
He takes the term from the Apollo programme, when many things had to be invented and success was far from certain. His point is that enterprise value and value to society can line up.
- Three ingredients. Science or tech progress, real-world impact and a sound business.
- Opposites in balance. Moonshot founders tend to combine optimism with pessimism and imagination with realism.
- Storytelling matters. Founders need to make the impossible feel real to talent, investors and customers.
- Business help is key. Technical founders most often need support on the commercial side.
What makes a startup a moonshot?
According to Rahul, a moonshot startup applies a breakthrough at the frontier of what is possible, aims at a big problem and still behaves like a company that makes revenue and returns for investors.
His example is Moderna: it built a new way to deliver RNA therapeutics, and its products ended up protecting many lives during a pandemic. The company was a business first, but the impact followed.
- Untested science that has been validated and proven
- A problem that matters to many people
- Real traction and a path to a large business
Does a moonshot have to be a billion-dollar company?
Not always. Rahul says the book focuses on venture-scale startups, but a moonshot is also a metaphor for attempting something seemingly impossible. It can happen in a research lab, in government or at a personal level.
What is a real example of a moonshot company?
His favourite is Varda Space, a space manufacturing company. The idea is that some products can be made far better in microgravity, so Varda launches small factories into orbit and returns the finished goods in capsules.
He notes it is risky and may fail, but says it has a strong team, early commercial traction and a large potential market.
How do moonshot founders think and build?
Rahul organises the book into four areas: mindsets, philosophies, strategies and ecosystems.
Mindsets and philosophies
He says moonshot founders hold opposing traits at once: very optimistic and very pessimistic, imaginative and grounded. They also use second-order thinking (the consequences of consequences) and systems thinking.
Strategies and ecosystems
Strategies include spinning out research from universities and labs, raising venture funding with a compelling vision and building new kinds of organisations. He adds that great storytelling and a rising-tide approach across investors, scientists, government and media help the whole ecosystem.
How do deep tech VCs evaluate early-stage startups?
Rahul notes that at idea or pre-seed stage there is little math: no revenue, no real metrics. Investors look for early traction or validation that shows the tech works and market risk is low, and then judge it qualitatively.
Venture capital follows a power law in which a tiny share of the portfolio returns the fund, so investors optimise for outliers. Strategies and individual investors differ, which is why founders should research fit. It is high risk and potentially high reward.
- Early proof that the technology works
- Founder quality and the team
- A portfolio approach built around outlier winners
- Individual investors have their own theses and risk appetite
Where do technical founders need the most help?
From incubating companies at Lux and helping build Arcadia Science, Rahul says scientists and technologists most often need guidance on the business side: legal, marketing, product and distribution.
For an early hardware founder in the live Q&A, he suggested looking at accelerators such as Y Combinator and Techstars, since in-house VC incubators are usually network driven. He also gave a measured view on crypto, expecting a downturn to clear out weak players, though he said it is not his focus area.
Further reading and sources
Frequently asked questions
What is a moonshot company?
Rahul Rana defines it as a startup that combines a scientific or technological breakthrough, a solution to a big problem and a strong business model. It aims at venture-scale returns while also creating value for society.
What do early-stage deep tech investors look for?
At idea or pre-seed stage, there are few metrics, so investors assess early validation that the technology works, founder quality and market potential qualitatively. They also think in terms of a power law where a few winners return the fund.
Where can a very early hardware startup get support?
Rahul suggested well-known accelerators such as Y Combinator and Techstars, plus accelerators in India, rather than approaching venture funds too early. Many in-house VC incubators are not open to applications and work through networks.
Conclusion
Rahul’s view is that ambitious founders should aim at hard problems while keeping a real business at the core.
If you are building in deep tech, work out the commercial story early and find partners who can help with the business side.
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