Archive for March 27th, 2007
Technology Startup Founders: Where are you positioning yourself?
The myth is that Venture Capitalists do not invest in ideas,
they invest in people. But the reality is that they do not invest in people,
they invest in good industries.
On the same line, I read very interesting information in the
book Engineering Your Start-up on guiding technology entrepreneurs to think
about business as one of the essential requirement for startup success.
We engineers are technology minded people and we always have
tons of ideas. In the process of cooking one idea after another, we tend to
neglect that understanding and exploiting market is an essential element of any
startup.
What is your market position?
Existing Product & Existing Market
This is already overcrowded market with numbers of manufacturers
or service providers. Entering into such kind of market can be an acceptable
income source, but it is tough to grow in this area. It may not be lucrative option
for engineering oriented startups.
Existing Product & New Market
In this area, you need to use your superior marketing and selling
techniques to create new market for existing products. Again, this might not be
a cup of tea of techie entrepreneurs.
New Product & New Market
This is very classic path always taken by technology driven
entrepreneurs. Innovation is the key in this path. There have been some good
successes in this area, but there have also been some very big failures. Having
said that, for techie startups, it is always good to play safe in this area.
New Product & Existing Market
Now by this time you must have understood that it is
recommended to position yourself in this area. Let’s understand why?
It is the safest area as it already have an established
market. You can produce advanced products and quality services by leveraging your
technology strength and innovative approaches. You can offer these new products
or services at low cost to customers, providing them maximum benefits. Customers
are attached to certain markets and typical products. But they adapt new
products in the same industry when there is a huge value addition for them.
At the end, all we need to note down is, picking the wrong
industry or betting on technology risk in an unproven market segment is
something VCs avoid and hence we should ponder upon our approach before we enter into it.
