The Metrics Investors Reward Aren't the Ones That Predict Commercial Success

In 2021 I watched battery startups with a compelling pitch raise a Series A in weeks.

In 2023 I watched some of the same companies — with more validation, more customers, and more data than they had two years earlier — get meetings canceled.

Nothing about the technology had gotten worse. What had changed was the capital, which had been burned by the hype cycle and overcorrected. The companies that deserved funding paid for the ones that had not.

That reversal taught me something I now consider the central commercial problem for a technical founder, and it is not what most founders think it is.

We're at TRL 5 and stuck in the valley of death — how do we show commercial traction to investors?

First, understand what you are up against. It is not skepticism. It is vocabulary.

The metrics that get funded are the ones that are legible to the capital, not necessarily the ones that actually predict success. That sentence is uncomfortable, and I stand behind it.

Through the 2010s, energy density became the battery industry's most recognizable measure of progress. It promised longer range and a gasoline substitute, and it fit on a slide. Companies that emphasized energy density raised money more easily than companies focused on manufacturing yield or supply chain — areas that were just as important to commercialization and far harder to communicate.

Over time this trained founders to present progress in metrics investors could easily recognize, rather than the milestones that were often more meaningful for reaching market. Energy density numbers appeared without pressure conditions, without cathode loading, without temperature assumptions, without cycle life. Partnerships and production timelines got announced on the basis of what was fundable rather than what was feasible.

Then the correction came, and it did not discriminate. It is not just that undeserving companies got funded. It is that the entire category got repriced after those companies failed, and the ones doing serious work paid the bill.

What the correction left behind

The 2023–2024 contraction did one useful thing: it sorted. The companies still standing generally have real technology, real manufacturing progress, and real customers. The investors still in the room have become more technically sophisticated and ask better questions.

But "more serious than it was" is not the same as "serious enough for what is required." North American battery companies are still operating with less capital, more skepticism, thinner local supply chains, a smaller workforce, and higher proof requirements than their competitors abroad.

Celina Mikolajczak, who has spent twenty-five years in this industry including senior roles at Tesla and QuantumScape, has estimated that meeting 2050 energy demand requires on the order of 800 gigafactories at 20 GWh each, with all-in costs above $500 million per GWh. The Inflation Reduction Act's roughly $4 billion for battery technology was, against that scale, a signal rather than a supply chain strategy. And that signal has since been revoked.

The deeper trap

Here is the part I think matters most for a founder today.

The hype cycle trained a generation of founders and investors to optimize for fundability rather than for the actual problem. Both sides developed a shared language that was disconnected from manufacturing reality. Rebuilding a market in which a founder can say "this is harder and slower than we thought" without signaling failure is not something that happens in a funding cycle. It happens in a generation.

In the meantime, the companies doing serious work are navigating a market that does not yet have the vocabulary to value them correctly.

What to show instead — and how

If you are at TRL 5 with real progress and no fundable headline number, you have two jobs, and most founders only do the first.

The first job is to identify the milestones that actually predict commercialization for your specific technology and buyer. For a materials company selling into cell makers, that is probably not energy density at all. It is sample availability, a documented test protocol a customer's engineers can run, manufacturability at a stated scale, and a realistic qualification timeline. For a cell company it may be yield, cost trajectory at volume, and a signed joint development agreement with a named counterparty.

The second job — the one that gets skipped — is to teach your investor to read those milestones. You cannot assume the capital already values them. The whole point is that it does not yet. So the pitch has to do translation work: this is the milestone, this is why it predicts the outcome you care about, this is what it will look like when we hit it, and this is why the headline number you are used to seeing would have told you less.

That is harder than leading with Wh/kg. It also does not get repriced when the next overhyped company fails, because you have given your investor a reason to believe that is specific to you.

What I think comes next

I suspect the founders who come through the next few years are not the ones with the best headline metric. They are the ones who built the vocabulary their investors did not yet have — and gave it to them.

That is slow work. It is also the only kind that compounds.

A longer version of this argument, including the policy dimension and the two conversations that led to Part 3, appeared in Battery Future.