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Open a deeptech company’s use-of-proceeds slide and one number often sits at the top: the size of the next round. Underneath, however, the money may be doing very different jobs—funding an unproven product, buying equipment, carrying inventory, financing receivables or supporting a new deployment.

For fundraising, grouping them together is convenient. For deciding what kind of capital the company actually needs, it can be misleading.

Those uses of money do not carry the same uncertainty. Funding an unproven product is different from financing equipment that has already been deployed. Building a new customer network is different from purchasing inventory against signed demand. A company can have one balance sheet and still contain several different underwriting problems.

The better question is not simply how much capital the company needs. It is: what is the next dollar underwriting?

Early on, the answer may still be almost everything. If the technology is unproven, customer demand is uncertain, assets cannot be separated and cash flows are hard to observe, equity may have to absorb most of the risk because there is little for another capital provider to underwrite independently.

That mix can change. A purchase order appears. A piece of equipment moves from prototype to repeatable deployment. Receivables accumulate. A deployment begins to produce cash flows that can be identified separately from the rest of the company.

What changes is not that the whole company has suddenly become safe. It is that one part of the uncertainty may have become bounded enough for someone else to price. A lender or lessor can look at an asset, contract or cash flow without having to underwrite every unresolved question in the company. Equity may still be carrying the parts that cannot yet be separated.

NIO’s battery-as-a-service model shows one version of this separation. NIO sells batteries to a separate Battery Asset Company, while users subscribe to battery usage from that company.

But the boundary is not clean. NIO remains economically connected to the Battery Asset Company and says its results could be affected if the company fails to operate smoothly. NIO has also provided a limited guarantee related to user subscription defaults.

The physical asset can therefore sit outside NIO’s ownership while part of the customer and operating risk still reaches back into NIO.

Also Read: Why Kyoto, not Tokyo, is Japan’s real deeptech bet

Gogoro adds a financing-side complication. Its public filings distinguish among syndicated loans, loans for batteries and loans for procurement and operating capital. Its 2022 syndicated facility was used to refinance existing debt, purchase electric vehicle batteries and replenish working capital.

Those uses are more precise than a single corporate funding bucket. Yet the 2022 facility also imposed company-level financial covenants, while Gogoro itself remained a guarantor.

Bankable does not mean solved

Northvolt provides the harder boundary.

In January 2024, the company announced US$5 billion in non-recourse project financing for the expansion of Northvolt Ett. The financing was backed by long-term offtake contracts worth more than US$55 billion and involved commercial banks, development institutions and public guarantees.

A particular industrial project had become underwritable on a basis other than ordinary venture equity.

Fourteen months later, Northvolt filed for bankruptcy in Sweden. The company cited rising capital costs, supply-chain disruption, changes in market demand and significant challenges in ramping production.

The financing showed what had become bankable: a project supported by contracts and guarantees. Production risk, market risk and company-level liquidity risk remained separate questions.

Financeability can therefore improve before the underlying risks have been resolved across the company.

Also Read: Deeptech and a fracturing world: Why Southeast Asia needs a new playbook

The same asset can have a different financing path

The same asset can face a different financing path depending on where it is deployed.

In Indonesia, a US$15 million financing package for TBS combined a US$5 million ADB loan, US$5 million in concessional financing from the Australian Climate Finance Partnership and a US$5 million parallel loan from DBS Indonesia. The funding supported TBS’s investment in Electrum’s electric motorcycles and battery-swapping infrastructure.

Underwritability partly depends on the institutions around the asset: banks willing to lend, development institutions able to take particular risks, leasing markets, guarantees and contracts that financiers can rely on.

The same battery or swapping station may therefore be financeable through one structure in one market and not in another. Local financing institutions do more than affect the cost of capital; they can affect which risks can be separated from corporate equity in the first place.

That should change the order of the boardroom discussion.

Before choosing a financing instrument, a board should first ask what has become observable enough to underwrite separately, what remains inseparable and what protections another financier would require. If an asset moves outside the company, the board should also ask which risks actually moved with it and which still reach back into the operating company.

Sometimes the answer will still be very little. The technology, asset, customer relationship and operating risk may remain too tightly connected, leaving equity to fund most of the system.

But as a deeptech company matures, that should be tested rather than assumed. What risk is each new dollar actually being asked to underwrite?

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