November was National Entrepreneurship Month in celebration of the country’s innovation and entrepreneurial spirit. As we close this important awareness month, we reflected on what it takes to be a successful tech venture, and we note some of the top traits and criteria in this blog post.
1. Market Need
Selling a product or service customers actually want is important. The market must be willing and able to pay for what you’re selling. This may seem straightforward and obvious, yet many startups struggle with defining their product-market need.
According to a CBI Insights report, 42 percent of failed startups attributed their failure to a bad market fit. A savvy tech entrepreneur will first determine that their innovation meets a need in the market and is something that customers are willing to purchase.
Different types of criteria have been used over the years by companies and investors to identify the commercial viability of a technology within a given industry. In looking for potentially high-value opportunities, tech entrepreneurs may want to look at the patent system. In particular, the information available in a patent database, such as the U.S. Patent and Trademark Database, can provide insight into, among other things, early trends in technological advances, and when taken as a whole, such information can act as an indicator of potentially high-value opportunities and product-market fit.
2. Entrepreneurial Passion
A little passion can go a long way, and can be a differentiating factor between success and failure for any tech entrepreneur. A founder who is passionate about his/her innovation can more easily motivate his/her team, as well as customers.
Additionally, if you can make an investor feel that you have that special quality they seek, and that you will do anything it takes to succeed, then your chances of attracting investment are much higher. In fact, entrepreneurial passion often directly affects how much capital a startup receives. Example of this can be seen each week on the show, “Shark Tank.”
3. A Strong Team
Investors want to invest in the next BIG THING – disruptive innovations that can build $100-million-size companies. However, investors rarely invest in ideas alone. They look for a strong and balanced management team that is equipped to handle the ups and downs of running a startup. Therefore, it is critical that a tech entrepreneur assemble the best team possible.
First and foremost, each member of the core team must respect one another and embrace a unified vision, while being committed to the startup 100 percent. Other important qualifications and traits include:
- Prior startup experience
- Industry experience
- Flexible and nimble
- Good communicator
It is equally important to ensure there are proper agreements in place among the founders around a handful of key issues that are critical to safeguarding the new business and its technology. These key issues cover: the roles and responsibilities of the founding team, equity ownership and vesting, and IP ownership.
For more on these agreements, read our blog, Key Legal Agreements for Technology Startups.
4. A Path to Fast Growth
Growth is what every tech entrepreneur craves – and what investors and markets want. Fast growth — or traction — is the sign of a great idea in a hot market. If a tech entrepreneur can successfully demonstrate traction, then it will be easier to attract investors and continue to grow. And, a growing startup can more easily overcome early challenges to success, such as losing customers or personnel.
5. IP Protection
You can have the best team, most polished pitch, and a solid business concept, but if you don’t protect that innovation, an investor may not be interested in taking a risk on your company. Investors often look to see whether a fledgling company has protected its intellectual property (IP) when determining whether to invest. To help protect your IP, there are some very basic documents you should always have in place to protect ownership and confidentiality of your intellectual property. The major ones are invention assignment agreements, NDAs, and employee handbooks.
Patents can provide broad protection for invention and innovation. They can cover almost any novel aspect of a technology, including hardware, software, materials, and business methods. Many innovations developed by an emerging technology company can likely be patented, and patenting those innovations can create significant advantage in the marketplace. A strong patent portfolio can help attract investments for emerging tech companies.
For more on patent protection, read our blog, How Startups Can Avoid Costly IP Mistakes.
While there is no one-size-fits-all blueprint for building a tech startup, focusing on the above characteristics can provide a solid foundation for success. Good luck!