Many startup founders treat their venture like an egg: if this one fails, they’ll go hatch another

There are many challenges in translating technology into business. These include uncertainty in demand from the market, finding right people to deal with, getting your first client (most potential clients are reluctant to be a guinea pig), and finding enough of a business incentive to justify the risk.

There’s also often a lack of hard data (or track record) to prove the benefit of a new solution. And for customers, its benefit should exceed its transfer cost from whatever existing platform or technology they are using currently.

We need only look at “successful” technology businesses that have good technology but are still bleeding money to see the challenges inherent: Uber, Amazon, and a handful of other tech wunderkinds.

Biggest nightmare: doubting founder commitment

The founder’s uncertainty around technology and commercialization is often a problem, but as an investor there’s something else that keeps me up at night.

Whenever I meet with new technologies or new types of business, I am not sure whether these founders are fully committed to its execution, success and vision. This comes back to point two from above: lack of commitment.

Also read: Meet the VC: Marvelstone CEO Joel Ko on why every founder should experience failure

Many startup founders seem to be treating their venture like just one of many possible eggs: if this one fails, they’ll go hatch another. (Or maybe they’re even working on more than one startup at once. Unless they’re Jack Dorsey, they should probably not be doing this.)

Another risk I see all too often is a glaring lack of information about competing technologies and alternatives on the part of the founding team. Not knowing your market and competitors inside out when raising money from investors is not going to inspire confidence. You should be committed to knowing your customer and competitors of your technology.

All of these factors and more must be considered if a new technology business wants to have a chance at overcoming challenges and risks inherent in bringing a new solution to the market. But, without doubt, commitment is the most important.

Don’t try to change his or her mindset

There are a few key mindset shifts required for successful venture creation – for both founders and investors. It’s very difficult to change key mindsets required for successful venture creation.

Founders and investors are coming to the table from different perspectives. Nevertheless, the first starting point will be to enhance their understanding of each other, with the working assumption that I cannot change him or her.

If you cannot sense the commitment, in the beginning, it is unlikely to come later. Mutual agreement and beneficial policy between parties are vital. Relentless persistence to succeed and patience during the hard times is key.

While it mostly fails to translate technology into viable businesses (just look at the scientist Nikola Tesla, who died in 1943 almost penniless), it’s easier to have a chance at succeeding if you know how to reduce the downside (risks such as lack of commitment) and maximise upside (mutual understanding, patience, etc.).

As an investor, these are some of the challenges I see. Of course, it’s always wonderful when a breakthrough happens and a new technology goes hand-in-hand with a solid business and a committed founder.

More time is usually required than expected or planned for in the completion and commercialization of new technology. So we should be patient. If you can do all of that and filter potential investments for high commitment levels, I’m sure we will enjoy many more restful nights as investors.

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Image Credit: Iben Kønig

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