20 Aug 2014

Tricky Business: Being Early

By Paul Miller

If you’re trying to do something new, people will often tell you that you’re too early. BGV teams get told pretty often that the market isn’t yet ready for what it is they have to offer – potential customers say come back when you’ve shown that it can work, potential investors say come back when you can prove that customers will buy.

It even applies to whole sectors. Five years ago hardly any investors were interested in digital technology for education or healthcare. If you were a startup back then, your first battle was convincing people that you could even start a business in that sector, even before people looked at your idea or your team. Nowadays both are hot sectors that many of big names in technology investing have piled into.

There are some good reasons why people don’t want to take a risk on investing or buying something that’s new. The main barriers they worry about are:

  1. That it will require a behavioural change – people will need to do something they don’t do already for your venture to work (you’re not just inventing a better mousetrap).
  2. It will need a regulatory change – they think your venture won’t work yet because current incumbants have regulatory protection. One investor recently told a BGV team to ‘come back in 10 years’ as they thought it would take that long for the regulatory environment for them to change.
  3. A technological change – you might be designing something that relies on a platform that is still only on the drawing board. If you were working on something for self-driving cars at the moment you’d need to have the finance to sustain yourself for a few years yet, if it relies on teleportation, you’ll be waiting for quite a while.

But you don’t have to just give up if you’re ahead of the curve. Other than raising a zillion dollars of investment, there are a few approaches to tackling the ‘too early’ problem:

  • Do something that’s the same but different. When you get knocked back on a particular business model, try something a bit different.
  • Apply for grants that help you gather evidence something will work. In our experience there are some grantmakers who understand ‘market failure’ better than investors and are willing to take a risk.
  • Change the debate – bringing together all the players and becoming ‘thought leaders’ around how things should change. Overleaf do a great job of this with their FuturePub events. You don’t need a megabucks budget to influence opinions these days.
  • Show that the change is inevitable
  • Stay small – sometimes you have to wait it out. That means spending very little while you wait for the market to improve.