All the start-ups face ‘the Main’ problem. Each one of you most probably know the problem I am pointing to, but let’s go deeper into the question. You work on your project day and night and create something fundamentally new. As a rule, you know your industry really well and you are sure that your project is something so new and unique that the market will be able to evaluate and appreciate it.
But what happens when you come to present your idea to a potential investor? Generally, investor’s first response is: your idea is not confirmed, it is too novel and the market does not yet exist so there is even no one to compare your project with, so i will not invest.
Another case is for a start-up to make something new by adding an additional feature or a consumer quality to an already existing product (prototype). Investor’s reply here won’t be very pleasant either: this already exists, it's a clone, I will not give my money to it!
So let’s look into both positions and understand as to why the middle ground is so rare to be found.
On one hand a new project that creates a new market is expected to generate significant income before competitors and ‘clones’ come in. But on the other hand the lack of market at product’s launch means high risk for an investor.
In general, the main problem start-ups face comes from to the gap between investor’s knowledge about market demand and start-up’s vision of consumer qualities of their product or service. On one end, we have a start-up team who believes in its project. Mostly it’s a vendor, grease monkey or widely speaking - technologist. Simply a person who is carried away by his idea, his technology, invention, etc. and who is oriented more in technical than market reality. On the other end we see an investor. Investors can differ in terms of investing and business experiences. But, as a rule, investor is already familiar with existing markets, and at the same time he doesn’t know much about nonexistent markets for goods that haven’t entered the market yet. Most likely, he already had an unsuccessful experience in testing his market hypotheses. Therefore, he is skeptical regarding launch of new products on to the market.
Let’s then question what is laking both investor and project team, that disables them to launch a successful project together.
The answer is simple, yet important. They lack multilevel and contextual information meaning accurate and objective information about an end buyer, his preferences and which need of his the product/service in question satisfies. It often happens that you release a product with one technical function, but the market finds a different function that your product satisfies best - i.e. in same way a smartphone became a lifestyle product. So, when you release products, step by step you assess how the market evaluates your product and make adjustments to both the technical component of the goods and the marketing strategy.
All of this information can already say a lot about the potential success of a new product and service. However, how can this information be obtained? Or does the hypothesis that success is always a random phenomenon hold?
Moreover, market data is only a small part of the important and necessary knowledge to launch a successful start-up.
It is also necessary to account for suppliers, outsourcers, everyone who is involved in the direct production, promotion and sales of your product or service. What is their percentage of the success of your start-up? A prior knowledge of reliable parties you can deal with is extremely important when launching a start-up. Such knowledge doesn’t effect the success of the start-up much, but rather influences the speed of its launch.
Thus, in order to avoid investor’s mistrust, it is necessary to learn how to find and use an extremely important information about market and stakeholders of start-ups. The solution can be found in creating a knowledge-based professional community.
Just imagine a start-up on one side, and an uncertain market potential on the other side. There are many links connecting them which already once served someone to get his niche market. For example, one brought a similar product to the market, had cooperation experience with trading companies, or has had quite a lot of experience in marketing research already. In contrast, others know what is in demand on this and other markets. At the same time many of them are consumers themselves, or in some other way are in contact with consumers. Shortly, the whole question is how to bring all these people with partial information about the market together for systemic interaction within the start-up. The heart of the matter is how to help a start-up team to implement their idea, and the investor - not to lose and to successfully invest their money.
Admit that interaction of experts with partial knowledge (mentioned above) will be much more effective if they themselves recognise the future of the start-up and understand what will benefit both start-up and them.
In this case, what can become a common ground for supporting start-up’s infrastructure?
In our opinion, this is an association of experts in all sorts of functions, which a start-up may need for a launch. They are united on the same platform with start-ups and investors. Experts are busy with providing services and selling their competencies to startups. But also as in any open community they accumulate and share knowledge and implement it into specific products and services.
What are the advantages of the professional community of experts, investors and start-ups in compare with individuals who are engaged in an investment, creation of start-ups and provision of professional service?
Presence of many experts, investors and start-ups gives an opportunity to collect more market data. Therefore, the professional community is aware more about the market than individual experts and investors.
The same applies to the implementation of certain functions in a start-up. A professional with decent experience can fulfil this function better than those who a start-up can find ‘on the street'.
Another benefit of having scattered, but located on the same platform specialists is that they can form effective teams. Firstly, because you might have team-building specialists on the platform itself. Secondly, forming teams becomes easier with the help of such tools as smart contracts and other solutions that might have been used in the previous projects.
As a rule, expert’s knowledge is backed by their experience, i.e. their market knowledge is not just an impersonal information but their real experience, which served them as a stimulus to offer their expertise in the first place.
It’s important to note the role of voluntariness - an unpaid participation of many experts in various start-ups, the opportunity to learn something new, to test your ideas or simply a steady professional services due to expert’s or investor’s loyalty to a product or team . And this resource should not be underestimated.
The most interesting effect from such a community will be associated not so much with the polyphony of competencies and the productive excess of knowledge, but also with a multitude of investors. Ultimately, it is obvious that after a long-term interaction of investors, start-ups and experts, stable relations will be established and they will get to know each other better and trust more. As a result, stable teams will be formed which will work more efficiently than simply unfamiliar though united experts.
This is the exact purpose of the project “Rocket ICO” - to form a sustainable functioning community, which will flourish by adding competencies. It will not only simply filter out inefficient start-ups and implement effective ones, but it will also learn and develop as a community in the relevant industry.
In our opinion only time and real projects will show whether the professional community can outperform the individual experts. But it is our belief that it will do!
Article by Andrey Miroshnichenko, Translated by Elena Krasovskaya.