It takes more than a single eureka moment to attract investor backing, especially in a notoriously high-stakes and competitive industry like cybersecurity.
While every seed-stage investor has their respective strategies for vetting raw ideas, my experience of the investment due diligence process involves a veritable ringer of rapid-fire, back-to-back meetings with cybersecurity specialists and potential customers, as well as rigorous market scoping by analysts and researchers.
As the CTO of a seed-stage venture capital firm entirely dedicated to cybersecurity, I spend a good portion of my time ideating alongside early-stage entrepreneurs and working through this process with them. To do this well, I’ve had to develop an internal seismometer for industry pain points and potential competitors, play matchmaker between tech geniuses and industry decision-makers, and peer down complex roadmaps to find the optimal point of convergence for good tech and good business.
Along the way, I’ve gained a unique perspective on the set of necessary qualities for a good idea to turn into a successful startup with significant market traction.
Just as a good idea doesn’t necessarily translate into a great product, the qualities of a great product don’t add up to a magic formula for guaranteed success. However, how well an idea performs in the categories I set out below can directly impact the confidence of investors and potential customers you’re pitching to. Therefore, it’s vital that entrepreneurs ask themselves the following before a pitch:
Do I have a strong core value proposition?
The cybersecurity industry is saturated with features passing themselves off as platforms. While the accumulated value of a solution’s features may be high, its core value must resonate with customers above all else. More pitches than I wish to count have left me scratching my head over a proposed solution’s ultimate purpose. Product pitches must lead with and focus on the solution’s core value proposition, and this proposition must be able to hold its own and sell itself.
Consider a browser security plugin with extensive features that include XSS mitigation, malicious website blocking, employee activity logging and download inspections. This product proposition may be built on many nice-to-have features, but, without a strong core feature, it doesn’t add up to a strong product that customers will be willing to buy. Add-on features, should they need to be discussed, ought to be mentioned as secondary or additional points of value.
What is my solution’s path to scalability?
Solutions must be scalable in order to reach as many customers as possible and avoid price hikes with reduced margins. Moreover, it’s critical to factor in the maintenance cost and “tech debt” of solutions that are environment-dependent on account of integrations with other tools or difficult deployments.
I’ve come across many pitches that fail to do this, and entrepreneurs who forget that such an omission can both limit their customer pool and eventually incur tremendous costs for integrations that are destined to lose value over time.
What is my product experience like for customers?
A solution’s viability and success lie in so much more than its outcome. Both investors and customers require complete transparency over the ease-of use of a product in order for it to move forward in the pipeline. Frictionless and resource-light deployments are absolutely key and should always mind the realities of inter-departmental politics. Remember, the requirement of additional hires for a company to use your product is a hidden cost that will ultimately reduce your margins.
Moreover, it can be very difficult for companies to rope in the necessary stakeholders across their organization to help your solution succeed. Finally, requiring hard-to-come-by resources for a POC, such as sensitive data, may set up your solution for failure if customers are reluctant to relinquish the necessary assets.
What is my solution’s time-to-value?
Successfully discussing a core value must eventually give way to achieving it. Satisfaction with a solution will always ultimately boil down to deliverables. From the moment your idea raises funds, your solution will be running against the clock to provide its promised value, successfully interact with the market and adapt itself where necessary.
The ability to demonstrate strong initial performance will draw in sought-after design partners and allow you to begin selling earlier. Not only are these sales necessary bolsters to your follow on rounds, they also pave the way for future upsells to customers.
It’s critical, where POCs are involved, that the beta content installed by early customers delivers well in order to drive conversions and complete the sales process. It’s critical to create a roadmap for achieving this type of deliverability that can be clearly articulated to your stakeholders.
When will my solution deliver value?
It’s all too common for entrepreneurs to focus on “the ultimate solution”. This usually amounts to what they hope their solution will achieve some three years into development while neglecting the market value it can provide along the way. While investors are keen to embrace the big picture, this kind of entrepreneurial tunnel vision hurts product sales and future fundraising.
Early-stage startups must build their way up to solving big problems and reconcile with the fact that they are typically only equipped to resolve small ones until they reach maturity. This must be communicated transparently to avoid creating a false image of success in your market validation. Avoid asking “do you need a product that solves your [high-level problem]?” and ask instead “would you pay for a product that solves this key element of your [high-level problem]?”.
Unless an idea breaks completely new ground or looks to secure new tech, it’s likely to be an improvement to an already existing solution. In order to succeed at this, however, it’s critical to understand the failures and drawbacks of existing solutions before embarking on building your own.
Cybersecurity buyers are often open to switching over to a product that works as well as one they already use without its disadvantages. However, it’s incumbent on vendors to avoid making false promises and follow through on improving their output.
The cybersecurity industry is full of entrepreneurial genius poised to disrupt the current market. However, that potential can only manifest by designing it to address much more than mere security gaps.
The lifecycle of a good cybersecurity idea may start with tech, but it requires a powerful infusion of foresight and listening to make it through investor and customer pipelines. This requires an extraordinary amount of research in some very unexpected places, and one of the biggest obstacles ideating entrepreneurs face is determining precisely what questions to ask and gaining access to those they need to understand.
Working with well-connected investors dedicated to fostering those relationships, ironing out roadmap kinks in the ideation process is one of the surest ways to secure success. We must focus on building good ideas sustainably and remember that immediate partial value delivery is a small compromise towards building out the next great cybersecurity disruptor.