Pittsburgh Ventures

Last week, I wrote about my experiences with two demo days at business accelerators:  LaunchBox Digital in Washington, DC and TechStars in Boulder, CO.  I tried to get an invitation to YCombinator in Boston as well, but somehow it slipped through the cracks.

One of the most impressive things I saw at both sites was “The NEW Ask”: how new technology startups have successfully calibrated to the new tech and VC reality of smaller funds, smaller capital raises, and the requirement for more capital efficient development and growth.  Across all 18 companies I saw, all but one were asking for a modest $250K – 750K first round investment; the outlier revised their ask when I spoke with them a few days later, and popped right into the range.

That was nice to see, but all was not completely rosy during my week of acceleration.  With movement in the right direction with “The Ask”, most of the companies took something important away – their ideas and markets were noticeably small.

Most of the teams I listened to were going after small ideas, gleaning over previously plowed ground – there were very few cranium-cracking BIG IDEAS that make you want to stand up and quit your day job to join the company.

WHERE ARE THE MORBIDLY OBESE MARKETS THAT VCs LOVE TO INVEST IN?!?

I understand that in the world of technology, it is easy to come up with features that are cool hacks to certain problems – but features don’t make a successful product, nor do successful products necessarily make a big, successful company.  I think it is crucial that entrepreneurs focus on BIG PROBLEMS and unique solutions that have MASSIVE MARKETS.  Features by themselves make freeware or shareware, or penny apps that sell in one of the many app stores available on a variety of platforms.

Successful entrepreneurs focus on big problems with real markets.

Our firm loves looking at companies in all different industries – but when we crystallize what we really want to see, we want big markets.  One of our focus areas is on companies in the big markets of warehousing, distribution, and logistics, and where those large, old markets intersect high-tech hardware or software (see our portfolio companies Kiva Systems and Shipwire).  We like this space so much because everyone has material goods that need to be gotten from the manufacturer to the end consumer – it is a huge market that will always be huge, even after many waves of significant productivity.  We love it.

Entrepreneurs – please focus on big problems and large markets.

Related articles by Zemanta

• Techstars (avc.com)
• Ten new TechStars companies are ready for their close-up (deals.venturebeat.com)
• LaunchBox09 Demo Day Shares 8 New Start-ups (somewhatfrank.com)
• Eight New Startups Pop Out Of The LaunchBox (techcrunch.com)