Promoting Clean Technologies ^ Forging Cross-Industry Collaboration

BHC Editorial: Competing for Tech Funds

by Halima Aquino, Bolton Hill Consulting Ltd.

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Technology Entrepreneurs always face unique challenges unlike those of other entrepreneurs. In today’s economy, some of the unique challenges faced by the tech entrepreneur under normal conditions are exacerbated and the result is a painful, empty feeling in the purse strings. Raising money from both traditional and non-traditional sources is difficult. Very difficult. Is it impossible? Yes- if you don’t keep the following criteria at the forefront of your strategy…

Having a good product isn’t good enough. Investors who are still investing in technology have more options because they have less competition. This means that technology entrepreneurs are competing for less resources. It doesn’t matter what industry you are focused on and you had better be focused across industries if your product allows for this. Here are some buzzwords to memorize…1) Rapid Market Entry, 2) Cross Applicability, 3) Flexibility & 4) Cost Efficiency

Rapid Market Entry: Investors want to get in and out of their deals quickly. As entrepreneurs fundraise from multiple sources, they must consider the same warning signs that investors do. Certain processes slow deals and progress down. For example, lengthy, unresolved technical patent issues, constricted geographic freedom to operate, patent applications with a complex chain of ownership, necessary but long-term laboratory & field testing, complex FDA approval requirements, and inexperienced leadership at the company can all delay and slow down profit earnings for an investor- or worse. A start-up medical device company with a working prototype and ground breaking, patented technology with broad freedom to operate in a global marketplace has a better chance of attracting investors than a ground breaking idea for a pharmaceutical that will face years of laboratory testing and regulatory hurdles before it can potentially enter the marketplace- if it works and hasn’t been superceded by something better along the way. Investors weren’t always deterred by a slow development process. Some still aren’t- but many more are nowadays….

Cross Applicability : A technology that can be used in multiple applications and across multiple markets has stronger appeal than one that does not. Across Political Lines: National boundaries exist for the patent laws we arbitrarily set in different countries. However access to technology across national boundaries breaks the rules of the game. Let’s face it – If your technology is really good, it will travel abroad. And when it does, it may bounce home slightly different, better and cheaper than what you originally created. Are you protected long enough to make some money? Protecting, producing and supporting products that function well internationally takes time. A company that hasn’t figured out how to do this quickly and efficiently will have trouble attracting funding. Bottom line- keep up or lose out. Across Industries: Often, investors are interested in entrepreneurs who can successfully specialize and focus on a single or a few markets in a small region while planning a gradual expansion to other markets and regions over time with the same or related patents. However- don’t misunderstand. The potential for extensive applicability and adaptability with your patents can make your package more attractive to a savvy investor.

  • A technology that can be used -without much further testing- to make a medical device in a civilian health care setting and one that can be used on the consumer and military markets is very appealing.
  • A device that operates on renewable power source is appealing both to the home consumer and military strategists, thus increasing its earning potential.
  • A robot that can explore other planets can be adapted for the military in dangerous climates and circumstances.
  • A software application that tracks human emotion for clinical purposes can also be used for security purposes.

Flexibility: As the number of scientists, technologies and technology platforms increase across the world, technology entrepreneurs are faced with an increased challenge to successfully adapt. An entrepreneur must understand and stay abreast of the changing and expanding needs and platforms on which customers are operating in the marketplace. Customer loyalty is harder to find in hard economic times. The technology must answer for itself. A technology entrepreneur who can show that they will quickly make use of multiple platforms, languages and operating devices will attract an investor base more quickly than one who cannot show this flexibility.

  • A cloud software application that can easily be updated and adapted for existing consumers and their changing needs is more appealing than one that has to be physically obtained. Updates that have to occur on the consumer end leave greater room for the consumer to migrate away from current product manufacturers.

Cost Efficiency: The technology must be cost efficient to develop, manufacture, distribute, sell and update. This does not mean it should be cheap. What it means is that the enterprise is under greater scrutiny and must operate as a lean machine. Waste is not acceptable to investors or consumers. Everyone who is still spending money is more cautious right now and they do not want to be taken advantage of. Whether its psychological or real (and right now it’s real) people will not pay for waste if they can buy value.

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