I was recently asked “What distinguishes SBIR/STTR companies that successfully transition into investor-ready ventures? Are there certain characteristics?” Here are a couple of points that struck me right away.
Some companies are a bit scattered in that they don’t focus on a particular technology or their key strengths. They struggle to get beyond SBIR funding and come up with many new ideas to try to get funding to keep the company alive. In a real sense, SBIR funding (with its 15-18% success rate) is easier than convincing investors their company, team, and tech are commercially viable. Going after SBIR funding for their next shiny new object seems to keep them locked into the cycle of barely surviving on SBIR grants. Other times, these are excellent rock star scientists who don’t understand the nuances of running a successful business. For example: “I’m a Ph.D. researcher and expert in the field, I know more about the technology than anyone on the planet… how hard can running a business be?” A successful technical founder will recognize they don’t have the time, or skill to commercialize a product or get investment alone and will be actively recruiting skilled and experienced business people.
To summarize:
- Admit that you aren’t the smartest person in the room when it comes to running a business or getting investment.
- Apply the scientific method to your business. Develop business hypotheses, OBJECTIVELY collect business data by talking to users, purchaser, investors, etc. to understand their needs; be willing to accept that your scientific business hypotheses might be wrong, if the data leads you in that direction
