Despite being out of the direct VC world for the moment, I’ve still kept in touch with some of the companies I used to work with. If I was still at the seed fund, we’d be reaching the point now where many of our early investments would be going through the so called “attrition phase” (we employed a serious spray and pray philosophy for the first few years).
I met up with one of the founders of such a company earlier this week, and heard about where the company’s at, how they’re running pretty close to the end of their runway, and really approaching that valley of death that a lot of VCs have been talking about recently (specifically saying that more companies need to meet their fiery deaths there).
I remember when we did the investment in that company. I remember what I was enamored with about it, why I liked the tech, the founding team, etc. and I still to this day would put my money behind them. Yes it took longer to pull together the revenue traction they needed, its just starting to come to fruition now, a full year and a half behind schedule. But the thing is, I still believe in this investment. I still don’t think it’s a bad investment. I would still give them my money today. In fact, two years later, I would be even more eager to give them my money now.
Talking to this founder really hammered home how early they were. Not just in terms of tech development which took longer than they anticipated (hey, they’d never done this before, and we didn’t know enough to know how long those timelines take), but in terms of where the market was. What this company was selling was totally the future. It still is. But it was 4 years to early. I still have no doubt that someone could take this same start up, and make a killing. Someone probably will.
Sadly, it won’t be them. A lot of startup literature talks about how companies and ideas need to be the future, be ahead of the curve. But I think in the case of this company, that’s not true. This company was too far in the future, and too far ahead of the curve. The market is just now starting to catch up. Don’t get me wrong, there are a variety of mistakes that also got made in terms of running a business, but none of these outweigh the fact that they never found product/market fit because ultimately, the market just isn’t there yet.
More than anything, when I look at this investment, I think it that the lesson at the end of the day is not to be too far ahead of the curve, but to ride the wave. Yes there’s lots of strategy involved in marketing, crossing the chasm and all that. And I do still believe that startups need to be ahead of the curve to be successful. But so much more of it is timing, and understanding whether the market is ready for that next big innovation.