Entrepreneurs: Comments from Founder’s Showcase
by KG Charles-Harris
I attended the Founder’s Showcase last Wednesday, and found it tremendously interesting from several perspectives. As a founder who has started several companies, of which a couple have been successful, it is really interesting to see how the startup and funding environment has changed.
The basic format of the Showcase is that companies are selected to pitch to a panel of VCs who then provide them with feedback and advice after having had a chance to ask questions after the pitch. Just hearing the feedback from the panel was very interesting, but also to see the different types of companies that were being pitched. There are a lot of very interesting startups out there…
After sitting through a day of pitches, feedback and interacting with other founders, my main takeaway is that things are getting a lot harder out there for founders who are not well connected in the Silicon Valley environment. There are a plethora of good companies out there that have created interesting businesses and technologies.
To get funding today, it is not enough to have an idea. It seems that what is required is to have removed a significant portion of the risk factors (technology risk, development risk, team risk, market risk and business model risk) from the venture to get an investment from an Angel or VC.
Professional and semi-professional investors (VCs and Angels) have so many deals to choose from that, of course, they will choose the ones that will bring the highest potential return. And this has a strong correlation with low risk and rapid turnaround to the next funding round. Having a completed product and some customer traction implies that much of the risk has been assessed and surpassed, making an investment very attractive. If you don’t have a product and paying customers, know that this is what you are competing against.
Some time ago, it was easier to get funding based on an idea or a prototype, but this seems to no longer be the case in the majority of companies. So founders have to be willing to sacrifice all the way to product and customers before they receive funding.
Another main takeaway from the Founder’s Showcase was the glaring lack of companies doing deeply technological things.
Most of the businesses presenting were essentially new business models with at web/app frontend for a particular industry segment. Almost none of the companies were working on difficult technological innovations.
But speculation as to why this is must be left for a future post.
KG Charles-Harris is CEO of Emanio and a special contributor to MAPping Company Success.
