Lately we have had first meetings with potential investment opportunities, and they have been an interesting and mixed bunch.
During the process I’ve learned a couple of things, namely to do with what my boss calls the three Ts; Team, Time and Technology.
Team: Is the team a tight unit with the appropriate skill-sets, are they calculated thinkers and motivated doers? Are there any hangers on, are they missing any expertise or experience?
To me the team is the most important aspect, afterall unless you have some crazy unique peice of IP, the team are really all you are investing in.
If you are thinking of investing in yourself and starting your own business, do you have all the capabilities needed to succeed? If someone was evaluating you, would they think you had a strong team or do you need more skills?
Time: Is the time right for the idea? It could be too early, it could be too late, is the market ready for the idea?
If this was done in five years time or if it was done five years ago, would you still expect a similar response? If yes then time is not crucial, and the idea could happen whenever… potentially without making much of a splash.
For an entrepreneur starting a business, another important dimension of time is working out whether this particular idea is actually going to be worth your time in the long run. Can you get enough out of it to justify spending 2, 5 or 10 years of your life on it?
To be able to evaluate the time dimension effectively, it is essential to have an in-depth knowledge of world events, trends and the economy, so you can pick up on potential opportunities and outcomes that may arise from changes in these. For example, after 9/11 security in travel, large organisations and governments around the world dramatically increased. If you had a piece of technology ready that improved surveillance back then, then you would have been ready at exactly the right time. A year earlier and no-one would have been interested. A year later and your competitors would have the majority of the market share.
Technology: You need to assess what you have in relation to potential competitors and substitutes, and what you have to offer potential partners and end users.
What IP do you have? If you don’t have IP then you need to think about how you can defend your product. Perhaps your greatest advantage comes from one of the other Ts, a very strong, capable and experienced team for example?
Another aspect to consider for technology is the rate at which technology changes. Are you looking for investment in building something that the big players could easily build, and that in a couple of years will be commonplace and very low cost or even free?
One last thing I have learned over the past couple of investment meetings is that you can never judge a book by its cover. We had researched one lead and didn’t really get that excited about it, but upon meeting with the team, I would invest in them if the opportunity arose.