by Sean Key
Frontier industries like commercial space and deep tech have always faced the same paradox: they are too important to ignore, yet too uncertain for traditional financial models. Investors often struggle to price risk when there is no operating history, no comparable benchmarks, and no clear pathway to profitability. This gap leaves promising companies underfunded and slows innovation that could reshape entire economies.
The Tier Method™ was created to solve this problem. At its core, it extends traditional required rate of return models by introducing a structured risk premium for companies where standard finance stops working. But as the framework matures, it is becoming clear that the Tier Method™ does not just price risk, it has the potential to create entirely new financial markets.
Step 1: Bringing Capital Into the Industry
The first function of the Tier Method™ is straightforward. It provides a transparent premium calculation that makes high-risk sectors legible to mainstream investors. By combining comparable company data, a conditional no-record premium, and a composite premium score across technology, financial, regulatory, and environmental factors, the Tier Method™ produces a risk-adjusted required rate of return that investors can trust.
That trust is the gateway to more capital. A structured model lowers psychological and informational barriers, opening the door for investors who otherwise might sit on the sidelines. Once capital begins to flow, the next challenge is consistency, and that is where benchmarks emerge.
Step 2: Establishing a Benchmark
When multiple deals are evaluated using the Tier Method™, a benchmark naturally takes shape. This benchmark is more than just a number, it becomes a common language for pricing risk across companies and sectors. Just as LIBOR or SOFR became reference rates in traditional finance, the Tier Method™ could serve as the reference point for frontier industries.
With a benchmark in place, negotiations become smoother, capital efficiency improves, and institutional players who require standardized metrics before committing gain confidence. But not all investors see the world the same way, which leads to the next layer of value, adaptability.
Step 3: Flexible Weighting by User Orientation
A key strength of the Tier Method™ is its flexibility. The composite premium score is built from four core categories, technological development probability, financial position, regulatory readiness, and environmental deployment.
These categories are not fixed in weight. Each investor, institution, or fund manager can adjust the weightings to reflect their orientation.
- A technologist may emphasize technical maturity above all else.
- A regulator may give heavier weight to policy clarity and compliance.
- A venture capitalist may prioritize financial runway and scalability.
- A long-horizon investor may tilt toward environmental or infrastructure readiness.
This adaptability makes the Tier Method™ a living tool, one that reflects diverse investment philosophies while still producing results that are comparable through a consistent structure. And once enough comparable results exist, the stage is set for something even bigger, a tradable market.
Step 4: Unlocking a Derivatives Market
With a reliable benchmark and the ability to tailor it to orientation, the Tier Method™ provides the foundation for derivative products. Financial institutions could create options, futures, and swaps tied to Tier Method™ indices.
Investors could hedge risk on frontier projects.
Speculators could provide liquidity by betting on premium movements.
Companies could stabilize financing costs by locking in rates.
This dynamic has transformed other sectors, from energy to interest rates to commodities, into investable and liquid markets. Frontier industries could follow the same path, provided the right infrastructure is in place.
Step 5: Stabilizing Pricing and Reducing Slack
The introduction of derivatives does not just expand financial tools, it also stabilizes pricing. By giving investors mechanisms to transfer or absorb risk, volatility decreases. That means less monetary slack, which is the inefficiencies, delays, and hesitancy caused by opaque pricing.
Instead of every deal being a bespoke negotiation, capital markets in emerging technology and commercial space could operate with the same efficiency as more established sectors. But efficiency requires trust, and trust depends on a neutral source of truth.
Step 6: The Database as the Neutral Benchmark
The real backbone of the Tier Method™ is the database. Built on independent research, the Tier Method™ Database applies the model to emerging technology and commercial space companies, generating neutral and standardized risk premiums.
Because it is independent, it carries credibility and trust. It allows investors to compare frontier firms on a consistent scale, brings transparency to how each premium is derived, and creates the reference point that derivatives markets need.
Just as MSCI indices guide global funds and S&P benchmarks power derivatives, the Tier Method™ Database could become the Bloomberg-style reference benchmark for frontier industries.
Step 7: Empowering Entrepreneurs in Negotiation
The benefits of the Tier Method™ are not limited to investors. Entrepreneurs gain an equally important advantage, a neutral benchmark to negotiate from.
In frontier industries, founders often face asymmetric negotiations. Investors hold the leverage because they can argue that the risk is incalculable, forcing entrepreneurs to accept steep terms or diluted equity. The Tier Method™ changes that dynamic.
With a standardized premium tied to comparable companies and transparent scoring, entrepreneurs can point to an independent benchmark when raising capital. This levels the playing field, ensuring that valuations and required returns are not determined by guesswork or fear, but by structured analysis.
Over time, as the database grows, entrepreneurs can position themselves relative to peers, showing progress, reducing uncertainty, and negotiating from strength. For founders, this means more than just better terms. It means credibility, comparability, and control, which are three essentials for building trust with investors while protecting long-term vision.
Conclusion: Transforming Risk Into Opportunity
The Tier Method™ began as a way to calculate premiums where traditional models fail. But its true potential lies in building a financial infrastructure for frontier industries. By attracting capital, creating benchmarks, offering flexibility, unlocking derivatives, stabilizing pricing, empowering entrepreneurs, and anchoring it all in a neutral database, it could accelerate growth and reduce inefficiencies.
In short, the Tier Method™ does not just measure uncertainty. It turns uncertainty into opportunity, and Better Futures Inc. is building the database to make that future possible.
Sean Key is the CEO of Better Futures, Inc.