Considering investing in cutting-edge tech companies in Venture Capital?
Venture capital investment in tech startups requires a keen eye for innovation and market potential. Here's how to make informed decisions:
- Research emerging tech trends and sectors with growth potential.
- Assess the founding team's expertise and track record for success.
- Examine the scalability of the business model and potential market size.
What strategies do you consider essential when investing in new technology ventures?
Considering investing in cutting-edge tech companies in Venture Capital?
Venture capital investment in tech startups requires a keen eye for innovation and market potential. Here's how to make informed decisions:
- Research emerging tech trends and sectors with growth potential.
- Assess the founding team's expertise and track record for success.
- Examine the scalability of the business model and potential market size.
What strategies do you consider essential when investing in new technology ventures?
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Focus your research on market timing, and capital needed for various milestones and also get a sense of your capital partners in the next few rounds. You also need to be prepared to market the technology of the company a lot earlier to global customers, partners and investors (if your investment is not based in the US).
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Is there a market? Cool tech doesn’t matter if no one buys it. Can the founders execute? Are they here to build or just burn time and capital Does it align with your strategy? If not, it’s just a distraction, not an investment.
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1. Founder’s capabilities in hiring people, doing sales, and raising capital. Also, founder’s passion about the problem is pivotal. Expertise may or may not be necessary. Sometimes, outsiders can bring additional perspective. 2. Market sizing is crucial, yet hard to quantify. TAM may be misleading, and SAM can increase greatly in expanding to a new feature or vertical. 3. A sound product is important, yet founder’s capabilities in iterating, and offering a good customer support may overcome short term issues in it.
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India has primarily been an application-driven market, adapting & localizing global technologies to solve domestic challenges. While it does have a budding deep-tech ecosystem, its limited compared to global leaders like US/Israel. Areas like AI, quantum computing, robotics require significant R&D investments, long gestation periods, strong IP frameworks—factors still evolving in the Indian context. Competing against established global giants like Google, NVIDIA, or SpaceX in cutting-edge tech can be daunting due to the resource intensity of such ventures. The key lies in balancing ambition with pragmatism, recognizing that path to success in deep tech is often longer & requires sustained support from both investors and the ecosystem.
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Let’s have some fundamentals clear: - The purpose of venture capital investment is to make money (get high returns) - Customer only pay for something that solves a real problem. E.g. Charles Babbage, the father of computer, the inventor, with one of the greatest inventions; But no money could be made for the next 10-12 years from just the invention. - Clear applicability of the technology should be established. - Post identifying clear applicability and use case in the market, alternate solutions / open spaces need to be identified if any. - Post the same: Size or potential of the market needs to be established. - Along with evaluating how quickly can the application of the Tech scale ~ should result in at least > 30% IRR
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Is it worth considering an investment if the technology, expertise, and business model are strong? Recently a certain company(Livestock Manure Treatment Facility) had all of them and an investor almost invested in that company. Why did it fail? Due to the delicate relationship between livestock farmers and the government, despite the technology, expertise, and business model being effective, the investment fell through at the final stage. If there’s one more critical factor beyond these three, it’s conducting interviews with stakeholders in the industry—except for projects as isolated as launching rockets.
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Three considerations: 1. How acute is the use case? 2. What’s the organisational capacity to be agile in its response to change in technology? 3. What’s the downside risk of obsolescence? Investors would do better, should they examine the above three considerations, as they make investment decisions.
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A cutting edge can be used in a variety of different ways to prepare jacket potato for more ingredients: 1. Pre-bake - a single slit in the roof of the potato can allow for the insertion of a clove of garlic and other aromatics, allowing a complex flavour profile to develop, deep in its pale flesh 2. Post-bake (a) - a lengthwise incision, to allow a filling to be added to the warm innards, adding flavour and texture 3. Post-bake (b) - a cruciform cut pattern, part-quartering the potato, accompanied by a manual squeeze from the centre-base of each quarter, partially inverting the potato and making it ready to receive a topping (rather than a filling)
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Having had some successes and many more failures, I would say there is no silver bullet. I can give my opinion on pitfalls to avoid: - Avoid narrow business niches - Avoid avid entrepeneurs without actual experience on business (even if diferent from the one you are considering) - Avoid running out of funds to reach the turning point (do not be stingy). If you do not have enough to reach that turning point you will not reach your goal. - Avoid overcrowded markets and experimental ones (unless you are a big competitor or consider yourself a great disruptor). And finally, give things their time.
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