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Prashant Fonseka is the Principal at CrunchFund; a tech investor with an entrepreneurial background, who has been establishing businesses, leading organizations, and guiding entrepreneurs for more than a decade. At CrunchFund, he is committed to solving operational and administrative challenges, and brand building. In his professional career, he has strengthened several businesses; raising revenue and helping them realize their visions and dreams. He has an individual enthusiasm for contributing to different classes including real estate, public equities, and debt. In an interview with Prashant, he provides insight on the challenges faced in the venture capital industry while responding to the challenges of early-stage startups.
"Staying close to customers and taking their feedback at the very first stage helps both customers and enterprises"
The advent of technology has undoubtedly been a catalyst in the swift evolution of the venture capital landscape. However, the alignment of the technology practices adopted with the organization's goal is quintessential to accelerate business growth. For instance, there are more SaaS investors now than ever before, but even they find it difficult to generate revenue. The metrics that are required and expected from businesses are significantly inflated.
A lot of startups mushroomed recently are leaving no stone unturned to capitalize on the technological boom. But only a few of them get funded and remain competitive in the market.
When I started my career in 2013, the digital era was relatively new, and there were a lot of greenfield opportunities. The cloud proliferation was significant, and most of the companies were expecting new cloud-based software platforms. Over the last decade, businesses have seen a lot of progress, especially in the mobile applications side. Businesses are making all the possible attempts in leveraging mobility across their business operations.
Down the road, business professionals are showing a lot of interest towards AR and AI in transforming their business workflows.
The practice of product development without employing customer feedback has often disappointed most startups. In the recent past, several products have deviated from customer interests by a mile, and a lot of companies had a hard time getting their product to the market. To avoid such issues, startups must adopt an agile development cycle, which helps in engineering better solutions reaching out to their customers. Staying close to customers and taking their feedback at the very first stage helps both customers and enterprises.
Startups today are working in an environment where there are fewer favorable opportunities as there is a possibility that whatever they are focusing on has already been attempted. Startups should understand what success and failure look like. They should ensure that the problems they are addressing are solved efficiently and uniquely, unlike their competitors.
Nowadays, businesses can be launched with little capital, and some of the niche challenges can be easily solved since the operational cost is lower than ever. A strategic approach increases the opportunities for a startup in building a tool that can be used for several applications. But getting early customers to use that general tool is not easy. Also, the tool requires more setup, more configurations, and more learning. With a primary focus on the initial customers, it is easier to acquire and retain them—and startups can make a product that is exceptionally easy.
The startups having an engaged approach with customers can accelerate the process of early development of products.
To figure out the target market segment, business professionals should establish their company in the space where their passion lies. Doing so, allows the founders to tackle the challenges in that space easily and deliver client satisfaction. To determine the market, there is a venture scale opportunity, there are few tasks, but one of them is a potential addressable market.
The tech giants like Google AdWords, Facebook, or LinkedIn has disrupted the market in every possible way and has created a multitude of opportunities for the business professionals. There are untapped areas like the adult care sector which has tremendous scope and companies can look into it.
One of the preliminary steps is market validation—understanding the size of the market opportunity. Researchers help to understand how much money is being spent in a particular space. They usually do a bottoms-up analysis to top-down analysis. For example, there are some companies which do not get even 0.1 percent of the market share, while there are some companies which get 10 to 20 percent of the market share. If it’s a B2B company, the relationship with customers is another important step. So, markets and customers play a significant role in the establishment of startups.
The best and simple advice that I give to business professionals is to ensure that their customers are always delighted. While talking with the customers on a feedback call, some customers say that the product is useful and solves the problem, but that’s not how a good feedback call sounds like. A good feedback call would rather sounds like—“Oh my god, this is incredible, this has transformed our business, we have wanted this for years.” A business can only prosper if its customers are happy.