Enhancing Potential Founder Engagement
How can investors encourage more participatory exploration of big ideas to elicit step-change transformations?
As a long-time technology and cybersecurity executive, the challenge of beating the allure of incrementalism in venture funding weighs heavily on me from both a buyer’s and a founder’s perspectives.
Over the past four years, I had the privilege of facilitating collaborations amongst enterprise-level security executives across New England and building connections with Boston-area investors. I found that the executives were so tired of the incrementalism that they had simply tuned out startup founders. The executives, even those in conservative industries, were not so much opposed to innovation as exhausted by the extraordinary number of look-alike competitors offering solutions that mimicked existing, though perhaps underperforming, deployments. Because pitched solutions failed to offer enough additional value to overcome the implementation friction, they were not actually positioned to solve higher priority big problems.
That changed when I could get both sides into a room to focus on the big problems without the marketing overhead. I found that while the founders were most certainly hungry for sales, they were also intellectually curious about how the executives perceived top problem areas in the context of what solutions they had at their disposal. At one private roundtable discussion, when several investors, founders, and executives came together to brainstorm the solution space to a specific problem set, they walked away with a much stronger perspective of their collective ability to overcome big problems.
Beyond that, the rich discussion also enhanced the perceived trust amongst the participants, establishing a basis for an ongoing dialog that I think could eventually lead to step-change progress.
In prior roles as an advanced technology researcher and founder, I discovered that few investors were interested in funding high-risk big idea research. When seeking to work with people on significant innovations, I moved to a large defense contractor to lead architecture design efforts for cutting-edge DARPA cybersecurity technology research. While there, I had the privilege of working with a multidisciplinary team of technologists and academics that explored daily the world of “what-ifs” as we collectively worked to conceive and design the next state-of-the-art. My experience suggests that the government was great at funding the viability risk down from ~80% to ~50%, but that investors were uninterested until they could envision a success pathway starting at a viability risk of <10%.
That approximately 40% viability potential gap routinely kills major ideas because the founders cannot gain enough engagement beyond the research community to fund through the gap. I think that is the space that VCs should shift their attention to find real disruption.
The challenge I see in the current environment is building the rich engagement that founders need to gain the network-effect they need to overcome barriers. They need other founding teams to brainstorm ideas together, multidisciplinary practitioners to proof out capabilities, and executive buyers to test out applicable use cases. I have been trying myself to make progress on some ideas, but it’s nearly impossible in the current remote work environment.
Perhaps the first step is to innovate the engagement pathways to allow for virtual brainstorming and random “spew” sessions that come more naturally in incubators and accelerators. I would be interested in thoughts on how we can do that without committing past mistakes of depending on existing networks (promote sustained homogeneous groupthink) and being subverted by unknown and anonymous participants (the random meetup challenge).
