What do you do if you're a Venture Capital professional investing in startups focused on new technology?

1st: Do a lot of research on your own. Understand the technology and the field to the full extent of your technical ability. 2nd: Have a technical advisory board to supplement your knowledge and capabilities. PhDs and masters students are a great resource. So many people don't put in the effort to be able to learn what is required to assess risk themselves which can result in investments into companies with bad technicals.

As a Venture Capital professional focused on investing in startups leveraging new technology, your role is multifaceted. You assess risk by evaluating market potential, team capabilities, and technology feasibility. Building relationships is key to sourcing deals and supporting portfolio companies. Strategic planning involves aligning investment themes with market trends. You monitor progress closely, offering guidance and resources. Being adaptable, you pivot strategies based on market feedback. Finally, you work on exit strategies, ensuring maximum returns for investors through IPOs or acquisitions. It's a dynamic role requiring a blend of financial acumen, industry insight, and relationship management skills.

Understanding the complexities of venture capital investment requires delving into several key questions. How effectively does the startup leverage its technological edge against competitors? What strategies are in place to navigate potential market fluctuations? Lastly, how can the founding team's background enhance the startup's success in the tech industry? These questions are essential in determining the viability and prospective success of an investment.

Emerging technologies present an inherent risk for VCs. One way to manage technology-related risk is for VCs to update themselves on new trends and technologies relevant to their space. Another way to accomplish this is to get access to a think tank of technical resources such as those available from technology forums, conferences, webinars, etc.

As a venture capitalist investing in startups focused on new technologies, your primary responsibilities would include: 1. Research and Analysis: Continuously researching emerging technologies and market trends to identify promising investment opportunities. 2. Due Diligence: Conducting thorough due diligence on potential investment targets to assess their technology, market potential, team capabilities, and financial viability. 3. Investment Decision Making: Making informed investment decisions based on your analysis and due diligence findings, considering factors such as potential for growth, scalability, and competitive advantage.

For instance, imagine attending industry meetups or tech conferences where you can mingle with up-and-coming tech founders. Engaging in conversations, sharing your insights, and listening to new ideas can lead to partnerships. Another example is joining online platforms and forums where tech innovators gather. Engaging here allows you to stay on the pulse of technology trends and emerging needs, potentially leading you to your next big investment. These settings not only enhance your understanding but also solidify your reputation as a committed and knowledgeable investor in the tech space.

Cultivate relationships with subject matter experts, researchers, and industry insiders who can provide insights into emerging technologies and their potential applications. This network can help you better evaluate the viability and scalability of new technologies and identify potential risks or roadblocks.

This close collaboration often involves regular strategy sessions and progress reviews. You might use your network to connect the startup with industry experts or potential customers, enhancing their market reach and operational insights. Additionally, implementing KPIs and performance metrics can help monitor the effectiveness of strategies and adjust as needed. By being actively involved and using data-driven insights, you can help ensure the startup not only survives but thrives in a competitive marketplace. Your active engagement not only boosts the startup’s growth potential but also increases the likelihood of a successful exit strategy for your investment.

While traditional due diligence is essential, consider incorporating "scenario planning with controlled chaos." This approach involves constructing a framework of plausible, yet disruptive, future scenarios that could significantly impact the startup's technology or market.

As an investor, it's crucial to discuss and align on key metrics with founders that are essential for tracking a company's growth. When dealing with a deep-tech company, traditional quantitative metrics may not be a parameter as growth initially would be more qualitative.

Nelp to create dashboard with full screen 5 key indicator and implement monthly or less meetings with the owners to see the progress

Assess if a startup applies technology to create final product. No one buys technology anymore. People buy products that improve their lives, companies buy products that improve workflow, help to reduce costs, improve operations. So if someone is trying to sell technology without a fully developed product, clear growth and sales strategy - run.

The three typical exit paths for VCs are company's acquisition, IPO and secondary sale. When evaluating an exit strategy, you can use various metrics, such as return on investment (ROI), internal rate of return (IRR), multiple of invested capital (MOIC), cash-on-cash return, and time to exit. These metrics allow you to compare your exit strategy against your expectations and market.

Determine where the new technology is likely to solve the biggest commercial problem in 3-5 years. Proving this ought to be the operational target for the company, and a VC's goal should be finding investors / acquirers who see value in the solution.

Beware of FOMO (Fear of Missing Out) stress. New technology startups focus on single solutions to complicated issues. Sometimes their business understanding is detached and abstact which creates serious commercial issues later. Thorough due diligence including assessing the technology, market potential, competitive landscape, team capabilities, intellectual property, and take Very Seriously the financials of the startup.

Developing and commercializing new technologies often takes longer than anticipated and may require pivoting or adjusting strategies along the way. Be prepared for setbacks and delays, and remain adaptable to changing market conditions or technological advancements.

While the ‘technology’ is important, remember that technology is driven and built by people. Take time to evaluate and invest in people with the right skill, drive, potential and character mix.