Leveraging the Venture Client Model
Why running a pilot before you set equity terms can change everything about your raise
I’m currently working with an early-stage deep tech venture: a US-based, proprietary materials technology with strong proof-of-concept data and a founding team that combines deep scientific credentials with strong commercial backgrounds. This was a team that could have spent six months pitching VCs without a dollar raised; we chose a different path.
What we did was structure a relationship with a contract manufacturing partner. This provided a letter of intent (LOI) covering in-kind manufacturing support, at a specific dollar value, and included an option for the manufacturer to invest alongside other investors in the SAFE. The company also has NIH and NSF applications under review in parallel.
Why does the LOI matter?
It signals three things to investors: the technology is manufacturable at scale; a sophisticated industrial partner has evaluated it and committed resources; and the founding team understands how to build commercial infrastructure. The LOI doesn’t replace the SAFE; it reduces investor risk before the first conversation. This sequence of building a manufacturing relationship before an investor conversation is the venture client model in practice, and it’s one of the most underused funding strategies available to deep tech founders at the pre-revenue stage.
What is the venture client model?
Founders are generally familiar with two corporate funding structures: Corporate Venture Capital, where a corporation takes equity in exchange for capital, and the corporate accelerator, where a corporation provides resources in exchange for attention and optionality. The venture client model is different.
Conceptualized in 2014 by BMW innovation manager Gregor Gimmy and institutionalized with the BMW Startup Garage in 2015, the idea was straightforward: instead of investing in a startup, become its customer. In this way the corporation pays for the startup’s technology through a commercial procurement relationship. The startup gets immediate revenue, validation, and credibility, while the corporation gets early access to emerging technology without capital commitment or ownership/governance complexity.
At BMW, the company adopted many more startup technologies at significantly higher speed and lower cost than they would have achieved through the CVC model (which requires more investment analysis and work). Other examples include Siemens Energy Ventures, which launched a venture client practice in 2021 and has since run more than 78 pilot projects with 40% resulting in Siemens adopting the technology or financial expanding the partnership. The model has since scaled across major companies like Airbus, Zurich Insurance, Holcim, Lufthansa, IKEA, Walmart and others. In 2025, more than 3,068 corporations invested in startups, a 29% increase over the prior year.
Why a venture pilot is more valuable than the money
A standard founder assumption I hear is that a corporate relationship matters because it might lead to investment. But that assumption is backwards: the corporate relationship matters because it validates the technology in a real, non-academic, commercial environment before any investor is in the picture. As a founder, if you can secure a signed pilot LOI or manufacturing agreement, three things can happen simultaneously:
It validates the technology. Lab or academic research data proves scientific merit. A corporate partner’s commitment to pay for or manufacture around the technology proves commercial merit. These are different proof points, and investors will treat the second as more credible because it involves someone spending real resources with skin in the game.
It generates revenue or committed revenue. In-kind manufacturing or related support is non-dilutive capital. The manufacturing LOI usually covers production costs and extends runway without impacting the cap table (ownership). This can help deep tech founders who are at a pre-revenue stage but are burning cash on developing their product or service.
It changes the investor conversation. A founder who walks into a SAFE discussion with a manufacturing LOI, a pending NIH application, and a proof-of-concept dataset is not selling a promise. They are presenting a de-risked asset. Investors will then shift from evaluating whether the technology might work (it now does and has a customer to prove it), to deciding whether the terms are right. This shift ultimately gives the founder more leverage.
The connection to the 63-Year Clause
An earlier issue of the Brief examined what happens when a founder approaches a corporate partner without a framework. The situation: a term sheet that included a royalty clause which, when modeled at realistic deployment volumes, ran for 63 years. There were undefined recovery components and no leverage to push back because the founder needed the partner more than the partner needed the founder.
That asymmetry is structural. It exists whenever a founder approaches a corporate relationship from a position of unproven need rather than validated strength. The corporate knows you need them. You know they know. That impacts the term sheet.
The venture client model is the remedy. A founder who has already run a successful pilot (or secured a manufacturing LOI) enters negotiations with demonstrated mutual value rather than speculation. The venture partner has already committed resources, and the technology has already proven itself in a commercial context. That changes the dynamic.
Run the pilot before you set the equity terms. That single sequencing decision is the difference between a term sheet that works for your venture and one that constrains it for decades.
How to structure a pilot for maximum leverage
There are at least five structural elements worth insisting on in any corporate pilot agreement.
Defined success metrics. Get a specific, measurable agreement in writing before the pilot begins. Vague success criteria become the partner’s leverage after the pilot ends; make it specific.
IP ownership clarity. Any improvements to the technology developed during the pilot should remain with the startup unless explicitly agreed otherwise. This is the most commonly neglected term in corporate pilot agreements and can be the most consequential to your company’s future valuation.
Reference rights. The right to name the corporate partner as a pilot customer in investor conversations, even if the pilot is under NDA. Reference rights with well-known companies are often negotiable and can be worth a great deal in credibility.
Right of first conversation. Do not offer any right of first refusal to a company to invest at a later stage, but do open a pathway to a deeper partnership or investment if pilot metrics are met. This is often not challenged by founders but it should be.
Time-limited exclusivity. If the corporate partner wants exclusivity during the pilot, that exclusivity must be time-limited and compensated. Indefinite exclusivity is a common trap in corporate pilot agreements after undefined success metrics (see above). It is how a short pilot can become a multi-year constraint on your business to expand in the market.
The more of these terms you secure, the cleaner your ownership and commercial story is when investors run diligence. Make sure the agreement is clean, with clearly defined parameters, and does not tie your venture’s hands.
One Action
Before approaching any corporate partner this week, answer one question: am I approaching them as a customer or as an investor?
If the answer is investor, stop and consider running a pilot first. A corporate that becomes your customer before it becomes your investor brings validated proof of value as well as financial support.
If the answer is customer, map the five structural elements above against your proposed pilot agreement. Defined success metrics, IP ownership clarity, reference rights, right of first conversation, time-limited exclusivity. If any of these are missing, ask why; and insist they are put back in.
One final note by sector, because the venture client model looks different depending on where you are building and who your natural corporate partners are:
Deep tech energy founders: Look at groups such as Aramco Energy Ventures, ADNOC Ventures, and SABIC Ventures as your first corporate customer targets, not your first investors. For these corporates, the customer conversation and the investor conversation are often the same meeting but frame the discussion as a pilot first.
Advanced materials, robotics, and industrial technology founders: BMW Startup Garage, Siemens Energy Ventures, Bosch Startup Harbor, and Korea’s K-Startup Grand Challenge are all potential customers. In Europe, the EIC’s Business Acceleration Services will broker the introduction if you are an EIC grant recipient.
Medtech: Consider hospital systems or a pharma partner whose patient population or therapeutic area matches your technology. Cleveland Clinic Innovations, Rex Health Ventures, and Orlando Health Ventures all combine clinical evaluation with investment optionality; start there. Medtronic Ventures, Johnson & Johnson Development Corp, and Philips Ventures use clinical evaluation relationships as precursors to investment. MassChallenge Healthcare matches medtech founders directly with hospital systems for rapid clinical validation at zero equity: the clinical pilot generates regulatory data, fundraising signal, and commercial validation simultaneously.
For all sectors: before any corporate conversation, ask yourself whether you have the five structural elements in your proposed agreement. If you don’t, you are negotiating without a framework. That is how pilots become constraints rather than assets.
The venture I'm working with didn't start with a pitch deck. They started with a manufacturing LOI. The investment round is easier because of it.
The PhD Founder Brief is published weekly by Todd Maurer — founder of Edunomix, owner of VersatilePhD. Global signals for founders building evidence-based ventures.
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Sources
Global Venturing: “Q1 2025 CVC data shows a steady climb” (February 18, 2026) · Global Venturing: “2026 World of Corporate Venturing Overview” (January 17, 2026) · Global Venturing: “Test before invest: Corporates turn to venture clienting” (January 16, 2026) · Medium/27pilots: “Venture Client Units on the Rise” (April 4, 2025) · Medium/Corporate Venturing Insider: “Inside BMW’s Venture Client Model” (October 3, 2025) · Deloitte/27pilots: Venture Client Essentials (August 21, 2025) · KoreaTechDesk: “Super-Gap Startups 2026” (December 29, 2025) · KoreaTechDesk: “Korea’s New 2026 Startup Package” (January 6, 2026) · Foreign Affairs: “The Secret to Japanese and South Korean Innovation” (March 12, 2025) · Silicon Catalyst Japan launch (November 3, 2025) · BioPharma Dive: “Sofinnova Partners raises $750M” (November 16, 2025) · MedTech World North America 2026: “Hospital Venture Funds” session · HTD Health: “MedTech Investment Trends 2026” (January 2026)