For decades technology companies have been using the Technical Readiness Level (TRL) index, developed by NASA in the 1970s, to assess and communicate how far their technologies are along the scale towards system launch and operations. Startup founders need to start applying the same approach to assess their commercial development, because most founders are surprised by how long commercialization takes and how difficult it can be. Thus the need for a Commercial Readiness Level (CRL) equivalent.
Technical Readiness Level Context
NASA designed the Technical Readiness Level for the space program, to apply it to the acquisition of technologies. Others have expanded the definition of the levels beyond space applications and have applied it to Department of Defence and industrial applications. The basic levels are as follows.
Source: wikipedia.org
The scale enables clearer communications, with a common terminology that is understood by all parties, as well as help guide project management, funding decisions, and risk management. Even with slight variations in definitions in the scale it is an effective tool that has stood the test of time for half a century
Commercial Readiness Level (CRL)
The most effective way to define Commercial Readiness Level is from the perspective of an angel investor or early-stage VC. Such an investor not only wants to back breakthrough technology and product, but also wants to back a successful business. The commercial stages an investor looks for in a startup are:
CRL 1: Opportunity Exploration. The founding team has researched and investigated a market sufficiently to believe there are customers with unmet needs that warrant further investigation. There are customers with apparent pain points not being met by current competitors. The proof at this stage is mostly anecdotal, though surveys and data analytics can increase confidence at that level.
CRL 2: Market Hypothesis. Through discovery interviews the team can match target customers with pain points and the types of value propositions that would likely appeal to them. They can articulate a hypothesis about the problem and solution with some confidence.
CRL 3: Problem-Solution Validation. At this level customers have reacted positively to a low-fidelity prototype and approximate price points. The prototype may be simply a wire-frame of a website (perhaps figma.com), slide show mock-ups, or a cardboard or balsa wood simulation of the product. The customers react to the user interface and the claims for what the product does (speed, accuracy, etc.), rather than assessing the underlying technology. It is common for founders to conduct 50 or more interviews to build their confidence that the demand is likely real.
CRL 4: Business Model. The team outlines the business model which includes where the company will play in the value chain, roughs out the economics, and defines how customers will pay (e.g., up-front purchase versus subscription). This model answers such questions as what goods and services will make up the total solution; which components of the product the company will make or buy; which types of companies to partner with; how to make money via licensing, product sales, or subscriptions; rough unit costs to ensure there is enough money in the chain to motivate all the participants; value propositions relative to competition, etc. This model defines whether the company will go direct to consumer (B2C), through others to get to consumers (B2B2C), sell only to businesses, (B2B), or any other combination. The answers to such questions will also determine what roles and skills are required on the team.
CRL 5: Go-to-Market. The founding team will define how best to market and sell the product and service. That will include defining the go-to-market channels, whether selling direct, through distributors, or via partnerships. It is often helpful to ask “who is already selling something to our target customers who might want to add to their portfolio?” The go-to-market plan will also define the promotional strategies, packaging needs, and pricing.
CRL 6: Customer-facing Processes. Every business must define how their customers (and often their customers’ customers) will learn, buy, get, use, pay, and support (LBGUPS). What are the marketing roles for the company and partners? How will orders get processed? How will the customers receive the product and have it installed, integrated, trained, or configured? What ongoing operations are needed to provide the day-to-day network, cloud services, and databases? How will customers pay for the products and services, and get answers to billing questions and problems? Who will provide field product repairs and answer technical questions? Many founders underestimate the degree of difficulty to get these processes in place, have to scramble after launch, and sometimes lose credibility with customers.
CRL 7: Initial Marketing and Lead Development. The product is ready, or almost ready. At this stage the company launches and announces itself to the market. That may include social media marketing, advertising, newsletters, conferences, and more.It may be a loud launch or a soft launch to the closest prospects. The purpose is to start filling the sales pipeline with leads the sales team can begin to develop. In some cases the company will have stayed in close contact with the customers interviewed in CRL 2, reviewed progress along the way with them, and reached out to them first.
CRL 8: Pre-Revenue Sales Development. Depending on the product, customers may require demonstrations, pilot trials, or proof-of-concept projects before they can buy. That work happens in CRL 8. It is important for startups to choose their sales development prospects well, as this phase can be long, time-consuming, and expensive to support.
CRL 9: First Revenue. First revenue in the bank from target customers is a significant commercial milestone. It can be a strong positive signal to attract the next phase of investors at higher valuations. Many investors believe that revenue traction derisks an investment because it means i) the product works, ii) some customers want it, iii) the marketing messaging connected, and iv) the company has a commercial mindset
The following table summarizes the nine levels of commercial readiness.
It is important to note that commercial development continues after CRL9, just as technology development continues past the first release. Development on the commercial side after first revenue will include honing the product-market fit, scaling up customer-facing processes, expanding channels, entering new geographic territories, and establishing market leadership. The job is never done.
CRL and TRL are Interdependent
Some technical founders believe that CRL follows the completion of TRL. In fact both journeys are interdependent and should move roughly in parallel. Some of the interactions include:
Customer-Centric Development: Customer feedback from CRL stages should directly influence technical priorities at each TRL stage.
Cross-Disciplinary Collaboration: Regular communication between R&D, marketing, and sales teams ensures technical and commercial goals stay aligned.
Iterative Development: Both TRL and CRL stages should progress iteratively, with pilots and prototypes feeding back into both technical and commercial refinement.
Metrics and Milestones: Define clear milestones for each TRL and CRL stage, ensuring progress in one domain supports the other.
Both technical and commercial readiness benefit from focus on an initial use case (see Startups Must Focus Their Initial Use Case) for maximum efficiency. Customer interviews and low-fidelity prototype testing help define the technical requirements for TRL, but also require progress in CRL to define them. The use case helps define the ecosystem in which the technology must operate to provide the customer a total solution. Customers in different use cases will likely have different requirements for technical specifications. The selection of partners will also likely define the specifications required.
Benefits of Aligning CRL and TRL
It is important to keep in mind that startup investors invest in businesses, not technologies. They profit when the business makes money, not just when the technology works. Investors want to see startup founders make progress on both the commercialization and technology development.
It is in the best interest of the company to align CRL and TRL for several reasons:
Reduced Risk of Market Misalignment. Ensures that technical development addresses real customer needs and market demand, avoiding the creation of products that are technically sound but commercially irrelevant.
Efficient Resource Allocation. Focuses investments on technologies with clear market potential, optimizing the use of resources for both R&D and commercialization activities.
Accelerated Time-to-Market. Speeds up the transition from development to revenue generation by synchronizing technical and commercial milestones, avoiding delays.
Improved Stakeholder Confidence. Demonstrates balanced progress to investors, partners, and customers, building trust and increasing funding and partnership opportunities.
Seamless Transition from R&D to Commercial Operations. Aligns technical and commercial strategies, ensuring smoother scaling and operational readiness when moving from development to market launch.
These benefits collectively maximize the chances of success while minimizing inefficiencies and risks. They also increase the chances that investors will want to invest in the startup.
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As a technology-focused startup founder, what can you do to accelerate your commercial readiness level?
With thanks to Drue Freeman for helpful suggestions and edits.