I’ve been to my first Wall Street Journal Tech Café this week and decided rather than post the typical noise and contribute to the echo chamber on Twitter by attendees at the event, I’d write a blog post on a particular topic from the first two talks that resonated with me. I’m working in the mobile and emerging technologies industry and working with an agile mobile agency has given me insight and a first-hand experience of the competitiveness of the agency scene – and the mobile sector in particular. However, I’ve never fully put thought into how mobile start-ups originate and gain a foothold in the market.
Admittedly, my knowledge on what a venture capitalist (VC) is looking for in a start-up is limited. Due to this I did find myself hanging on every word that Jonathan Goodwin (first talk), Adam Valkin, Saul Klein, and Barry Maloney (the later three in the second talk) spoke on, in what came across as almost the Confessions of a VC. The second talk opened with an open question – what excited them as VCs and the next big thing? A wry smile crossed my face as they mentioned that the mobile industry is something that excited them. With this said, the thought that kept crossing my mind was – how is this applicable to my industry; the mobile sector? Marrying the VC’s insights with my experience in the mobile industry here is what I see as one of the biggest considerations for an entrepreneur/start-up in the mobile industry:
Choosing your VC: ‘a bigger decision than choosing your wife’
From what I gleaned, one of the biggest things that occurs when a VC comes on board for a start-up is how that VC will impact your strategy. The message drilled home by all VCs is that any start-up, no matter what industry, should strive to get the right people and right capital on board. The cut-throat nature of VC-ing (if that is a term?) is that VCs will typically look at your start-up as one of ten they will be investing in as part of a ‘bigger picture’ investment fund. Therefore, you want to seek out the VCs that will add the most value to you and really buy into your idea. The more research and better matched your VC is the more likely that person/institute will benefit you when they provide capital, advice and guidance. Consider what relevancy the VC has towards experience and business acumen, reputation, industry contacts, opportunities to leverage existing relationships they have, and chemistry you have with them.
How can you target these VCs? Attend events such as the WSJ Tech Café, research the VC you need to be in front of on LinkedIn, attend other relevant network events and social activity, speak up at these networking events make your voice heard, get advice from the VCs, ask the companies the VCs have invested on their experiences, attend hackathons such as those run by seedcamp, and – in general, do some solid business development.
What does this all mean for a start-up in the mobile industry?
The mobile industry is ultra-competitive and gaining breakthrough in this scene is difficult. The mobile and emerging technologies space is inherently a technical environment that requires someone with an idea and/or technical acumen that has the breakthrough and disruptive (to borrow Barry Maloney’s phrase) potential. If you really have an idea that has the potential to make an impact, then target the right VCs that you see will add most value and maybe not push you down the quickest monetisation/revenue generating strategy that may not provide longevity.
A question was asked at the second VC talk that I thought was particularly applicable to a start-up considering approaching VCs: ‘what if I don’t have the tech person required to get my great idea off the ground?’ The simple answer given was that ‘you’re falling at the first hurdle’. It is blatantly apparent that you need that tech person to attract the VCs and get your idea into a working prototype or beta mode where it can be tried, tested, and is agile enough to iteratively be improved on (just look at the app.net story).
The mobile industry is full of successful examples where the business head comes together with the tech person that ultimately proves a much more attractive proposition to the VC (I write this as Tim Cook gives his presentation at the Apple WWDC 2012 event and can’t help but think of how Wozniak and Jobs (along with Wayne) mirrored this set up). With this solid foundation and partnership existing – coupled with idea worth shouting about – only then VCs will be interested in talking to you.