It seems to me that, though small business develops exponentially in South Africa. And small has become quite huge lately. We still get into business with twisted intentions, and by twisted I’m referring to the intent for funding without a solid business model.
Vinny Lingham spoke at the last 27 Dinner about his accomplishments as an entrepreneur, which also included building ventures that later got Venture Capital funding. It is always inspiring to hear an entrepreneur who broke through the barriers to build something meaningful. Even more worthwhile was listening to him retell his own story.
As for the impression many people still have of funding being the foundation for a successful business. That is another story altogether. And the reason for this post.
“But it’s different for software companies and Venture Capitalists view business differently.” Oh, is it?
Any investor considers the viability of a business, not whether it is a software company or not. So that left me with the question, do we think investors/funders change strategies with varying products? Or, are there fewer entrepreneurs than innovative techies? In this case, developers turned entrepreneurs. Geeks who aren’t really entrepreneurs.
Before you throw tomatoes, cans and possibly yank your monitor from the rest of your machine. Hear me out a bit.
The basics of business remain the same, regardless of the product you are developing. Lately, however, there seems to be a lot doing the rounds about products being developed. Of course, there is a need for more innovative products.
And as Web 2.0 has taught us, the market trails far behind innovation. As the masses, we also only know what we needed long after someone has designed it. But a solid business model behind it is what translates to a Return On Investment. Not just the product, and that is what the latest software innovation is.
In an article written earlier this year about VC funding and the need to build sustainable businesses this was said. . . .
Those seeking funds are seeing higher scrutiny of their business models. “There’s less willingness to let it ride now than there used to be,” said Vytas Kislieulius, CEO of Collections Marketing Center, a software-as-a-service startup that runs a collections exchange. VCs are looking more closely at the customer sets of the companies they are considering investing in, Kislieulius added. “It takes so much more proof that there’s a real market and that there’s real customers.”
It is possible that I have old-school business thinking, but is there still space out there for sustainable startups?
Has funding clouded all business thinking into developing companies and waiting to sell-out to the highest bidder?
Image by Rainbow Sherbert on Flickr