In the climate tech finance world, there is some confusion as to what constitutes a pilot project and what is a demo project. There are also different views on whether you need a demo project at all. Oftentimes, the two blend and become indistinguishable from each other.
At your Pilot stage, your objectives were to demonstrate that your technology can work outside the lab and map the problems that you will face when you build your demo. The demo is an end-to-end representative of your real-life project. Building a demo starts immediately after you’ve built your pilot. Start planning the demo the moment your pilot goes live.
The demo has two major objectives:
De-risk the technology as much as possible. Demonstrate your product or process to customers. Give them “kickable tires.”
Try out project design and management and prepare for FOAK
Your first objective in the demo is to make a product that can be shipped to a customer. You have to give your customers and investors something they can touch, walk around, and “kick the tires”. The demo has to prove that the product can be made to specifications in a factory environment.
After the demo, your product, not your PowerPoint or lab sample, becomes your main tool for attracting investors and customers. During this phase, it is necessary to de-risk your technology as much as possible. Demonstrate availability of components and raw materials supply chains, safety and reliability of the manufacturing process, and costs achieved at the above-lab quantities.
Your second objective is to test something new – project delivery. Your technology is tested in the Pilot. In the demo, you test the technology at a slightly bigger scale, and this is the first time you test how you will build your FOAK and NOAK. You will start building up your project team, practice site selection, and plan and execute construction. Completing the demo stage will, well, demonstrate that you are ready to go for the FOAK.
It is important not to skip your demo step, even if you do not plan to build your technology yourself in the future and your business model is licensing. According to Breakthrough Energy Catalyst, the companies that deploy their technology tend to succeed more often than companies that don’t. Many companies spend two to three years trying to license their technology and getting nowhere.
The reason is that most investors and incumbent firms do not want to take the risk of proving that the technology works in real life. I can attest to this myself. In 2015-2016, I was looking to license a wind turbine technology. There was no shortage of offers of licenses from wind turbine design companies, or even from companies that have built two to three turbines themselves. In the end, we bought a license from a Dutch startup that had over 20 turbines operating. We were looking for a de-risked technology proven to work in the field.
Here is the 4-step framework for building your demo:
Find the right scale that will demonstrate the de-risking of technology and manufacturing process
Design for modularity, either at core technology or around it, that can be replicated at the FOAK level and beyond
Build a project execution team - they will be carrying you over to success with the FOAK.
Reach Technical KPIs, like the number of hours worked, chemistry stability, charge and discharge cycles, etc.
Step1. Find the right scale
Your first task is to demonstrate that your technology and manufacturing processes are de-risked, that is, they can work on something close to the industrial scale. Your demo has to be big enough to convince customers and investors that it will work in real life and at 10x scale, but also small enough not to break the bank.
How big should the demo be? The Breakthrough Energy Catalyst experience is that it should be 5-20x your Pilot. The exact scale will depend on your particular tech. When thinking about the right scale for Demo, think not about the product or process but about the scale that would convince someone who is risk-averse that investing in the next stage (FOAK) is safe, at least from technological and manufacturing points of view. Physically, at the minimum, it should be large enough to demonstrate end-to-end manufacturing of your product with no steps skipped. When determining the upper limit, keep in mind that your FOAK will be 10x that.
To illustrate what a 5–20x scale looks like, consider a lithium-ion cell startup with a 5-10 MWh pilot line. A 5–20x scale demo would range from 50 to 200 MWh—enough to produce small commercial batches and attract automotive or energy storage customers. For example, JR Energy Solution, a Korean startup in MaaS for cells and electrodes, built a 500 MWh line whose capacity allows other lithium-ion cell startups to make a demo version of their cells in a full factory environment. The capacity is actually 25x, but in the lithium-ion cell world, some players have Demo plants of 1-2 GWh, which is 50 to 100x.
Step 2. Design for Modularity
Investors don’t like technologies whose costs have to be determined all over again every single time the technology is deployed. Compare solar and nuclear energy. Solar is the cheapest available energy at the moment. It can be deployed in six months almost anywhere in the world, and its costs are highly predictable. Contrast this with nuclear energy. Each nuclear power plant demands its own engineering and design, with costs different for each new reactor planned. Deploying nuclear power plants often takes over a decade, and the final costs are almost always several orders of magnitude higher than estimates. One of the key differences is that solar energy is modular, while nuclear energy is project-based. No wonder that among solar energy professionals, solar panels are not called “panels” but “modules”.
The demo stage lets you evaluate if your technology can be modular or not. If your demo demonstrates a single unit, of which more could be built in the future, then you have a modular design. Modular solutions reassure investors the most. Why? Because modular design lowers execution risk and costs. If you build many copies of one thing, it is less risky than planning and engineering a new approach each time. Supply chain management, logistics, engineering, and construction are all several orders of magnitude easier if you have a modular design. Having a modular design means that after the demo, you will be numbering up rather than scaling up.
Now, not every clean tech product can be designed for modularity. In nuclear energy, startups are working hard to design a modular reactor, but with little success. There is a reason for nuclear reactors to be big. Bigger reactors offer much better economies of scale. On the other hand, carbon capture can be modular, as was proven by Climeworks in their demo and FOAK/NOAK.
If, in your case, modularity is not possible, don’t wring your hands over it. Instead, design for modularity of balance-of-plant around your core technology. Think about how to simplify and standardize the fixtures and fittings necessary to get your technology working. How can you standardize groundworks, piping, heat exchangers, transformers, UPS, etc? This is the time to do it while your project is still small enough to handle every challenge with relatively few resources.
Step 3. Build a Team
Until now, your team probably had two main groups - the R&D group, where your scientists and engineers developed your product, and your investment/marketing group, busy raising investment rounds. When you start working on your demo, you will have to include one more group - the project management group. Make no mistake - this will be the team by which you’ll either succeed or fail. Numerous startups found out about this too late, with one of the biggest examples being Northvolt.
Building a demo is your best chance to lay the foundation for your project execution team. But before we go in-depth about the project management team, let's answer the obvious question: Why can’t you outsource it? After all, that’s what Engineering, Procurement, and Construction (EPC) companies are for! There are two reasons why you can’t and shouldn’t do it at the demo stage.
First, most EPC contractors will avoid small, high-risk projects - and that’s exactly what your project is at the moment - small and high risk. The many unknowns in the demo and its minimal size will put off EPC companies. Second, if you can get an EPC to do it for your now, you will lose critical knowledge of scaling your technology to someone who might only use it once.
The general purpose of the demo is to learn how your product and technology will behave in real life. This includes learning how to build it. Don’t skip on that, and keep ownership of most elements of the demo – planning, engineering, execution, operations, etc. This will come in an enormous help during the next phase, as it will allow you to decide what to outsource while building the FOAK.
Step 4. Reach Technical KPIs
No battle plan survives the first contact with the enemy. You’ll learn this Murphy’s law when you build your demo. Demonstrating how your production line or project works continuously from raw materials to finished product is hard because it has never been done before. That is why you don’t want to build a full-scale commercial project straight after the pilot. Mistakes and problems will happen. Most likely, the longer your demo operates, the more ways it can fail will surface.
And this brings us to the core reason for building a demo after the pilot, instead of immediately going for FOAK. You want to have time to tinker and optimize at a scale where you won’t be losing too much money and without pressure from your customer to deliver on time, budget, and quality. You want to make sure that when you build your FOAK, you will avoid most of the problems.
It is important to remember that your demo is there for you to learn and to lower the perceived risks for your customers and investors. You are not building a demo to earn money. In fact, your Demo will lose money. And that’s ok. Forgetting about money lets you focus on delivering top-notch technical KPIs. If you have customers waiting, you would certainly rush the Demo and aim to deliver on time and budget, even if your product is not of a target quality. There will be instances when you see a problem with your process, you’d stop it, rejig it, and launch again. This will be extremely hard to do if you have a customer waiting.
How do you know that you are ready to go for FOAK? You know it when you reach the target technical KPIs at your demo. These will be technology and project-specific, like achieved energy conversion efficiency coefficient, number of cycles of charge and discharge, energy density, uniformity, etc. The key is that these KPIs should be exactly the same as the specifications of your commercial product.
How do you prove you’ve reached your technical KPIs? Start with time. Investors at series C or D want to see at least six months of continuous operation in the factory environment. When you operate something for this long, things degrade in a way they don’t do in a pilot line. So if something has been running for six months non-stop and delivering the same results, it is likely to do the same at a larger scale.
Why Building a Demo Project Is the Bridge to Success
Building a demo is more than a technical milestone - it’s a critical proof point for your technology, your business model, and your team. By the end of this phase, your demo should not only demonstrate that your technology works at scale but also that it can be built, operated, and replicated. Investors and customers will no longer be evaluating your pitch deck or your pilot results - they’ll be evaluating a real, tangible product that they can see, touch, and test.
The demo stage is your opportunity to uncover and address the challenges that lie ahead before they become costly mistakes during your FOAK. It’s the time to validate your manufacturing processes, supply chains, and technical KPIs. It’s also your chance to build a project execution team that can carry your technology from demo to FOAK and beyond.
Most importantly, the demo proves that you can execute, not just innovate. It shows that your technology works not only in the lab but in the real world and that you can build it at a scale that makes sense for customers and investors alike. Skipping or rushing this stage is a gamble you can’t afford to make. On the other hand, completing it with diligence will position you for success, whether your path forward is building your FOAK or licensing your technology. Your demo is the bridge from promise to proof. Cross it carefully, and you’ll be ready to tackle your FOAK with confidence.