The First Customer Matters

There is a point in building a company when another introduction stops being useful. You need someone to buy.

Someone with a problem, a budget and enough confidence in your team to put the product to work.

I’ve been thinking about this as Europe tries to build stronger AI and defence technology companies. We spend a lot of time discussing how to finance them. We should spend just as much time on how they get their first serious customers.

Two developments this month caught my attention.

The UK’s Sovereign AI programme described an R&D procurement scheme with up to £100 million available over its lifetime. There are no minimum turnover requirements. Companies keep the intellectual property they develop, and upfront payments may be available where cash flow would otherwise prevent participation. These are development and validation contracts, with wider deployment still to follow. Source

On 1 October, NATO DIANA announced seven capability development contracts through its Rapid Adoption Service. The companies will develop and test counter-drone technologies in an operational experiment, giving potential buyers evidence to assess them for future procurement. Source

What happens after a trial?

Both approaches give young companies something valuable: paid work on a defined problem, with access to the people who need it solved.

The harder question is what happens afterwards.

A successful trial should lead to a decision. The customer buys, asks for specific improvements or decides the product isn’t suitable. Each outcome gives the company information it can act on.

An open-ended expression of interest gives a founder very little to work with. You can’t confidently hire against it. You can’t plan delivery. You keep people available for a contract that may arrive next quarter, next year or never.

For a small team, that uncertainty is expensive.

Understand who can buy

My background is in consumer technology. At LOVOO and Fastic, understanding whether people found value in a product was central to building the business. You could attract attention and still lose the user. You had to give people a reason to come back.

Working in defence and public safety changes how that relationship works. The user, the person approving the purchase and the person responsible for the budget may all be different people. Someone can need your product, test it and want to keep using it without being able to buy it.

As a founder, you have to understand that early. Who owns the problem? Who can commit funding? What evidence do they need? What needs to happen between a successful test and a contract?

I would want those questions discussed before the trial starts.

Buyers have responsibilities, too

The buyer has responsibilities here, too. If an institution invites a company to spend months integrating a product and working with its teams, it should be clear about the route to a purchase. There may be further competition, approvals or security requirements. Spell them out. Give the company enough information to decide whether it can afford to participate.

Be honest about what you can deliver

Young companies also need to be honest about what they can deliver.

A strong demo leaves plenty unanswered. Who handles support? How much work will integration require? Can the team maintain the product while serving other customers? What happens when the person who built a critical component leaves?

Public buyers are right to ask. Founders need credible answers, and the price needs to cover that work. Winning a contract that leaves you unable to support the customer properly helps nobody.

Why the details matter

This is why I care about the details of these new procurement programmes. Minimum revenue thresholds, payment schedules and ownership of intellectual property can determine whether a young company can participate at all. A company may have exactly the technology a buyer needs and still be unable to finance six months of delivery before receiving payment.

Europe has a direct interest in getting this right. If we want companies to build here and stay here, they need a market in which they can earn revenue and improve their products.

Investment gives a team time to build. A customer gives that work a purpose, tests its value and pays for it to continue.

What success looks like

I’ll be watching what happens to the companies entering these programmes. How many move into regular use? How long does the next decision take? Do customers renew and expand their contracts?

Those are the results that would make me believe we are getting somewhere.