Why good technology won’t necessarily get an investment

“You have to debug your business model.”

I looked across the table at the VC I was having lunch with. It wasn’t going how I thought it would.

I was ready to tell him about the cool technology I had developed and how it would transform the world of enterprise computing. But he wasn’t interested in that.

When he found out we were pre-revenue, he started to talk about our business model. Then, he went on to talk about a bunch of enterprise technologies he had invested in, which I thought were not very good in the first place.

After not getting meetings for a long time, having meetings abruptly canceled, and taking meetings with investors who displayed a distinct lack of interest, I started to realize that I didn’t have what investors wanted.

What was I doing wrong?

The problem of early success

First, I realized that an early success in something can lead you to false assumptions. I know that because it happened to me.

In the late 90s, I was an owner/partner in a company that got investment money based on a technology we were developing. It was very technologically difficult as we used Java, which at that time was massively less capable and reliable than it is today. Everyone made money when we sold the company based on our technology.

That, I thought, was a path to success: Build a better technology and the investors will beat a path to your door.

But that was a different era.

I set out to develop another killer technology around a problem that no one had been able to solve. I rolled up my sleeves and started to work. After years of R&D, I solved the problem and formed a company.

I was convinced that having a technology that would “change the world” was the ticket to getting investment and being able to, well, change the world.

Here we are many, many years later and my company is slowly bootstrapping and seems to have as much chance of bagging an investor as we have of having tea with Bigfoot in the woods.

My own analysis

I don’t know a lot about investments, but I have developed my own analysis of what investors want and why developing amazing technology doesn’t turn them on.

(Note: I’m talking about software innovation. Other technologies like computer hardware, medical technology, and everything else that you can touch and feel are in a totally different area. It is much easier in these established fields to determine expertise.)

Conclusion