For Americans, the issue of transportation is the utmost importance, in some cases representing the key factor for getting or having a job. The public transit is not the solution in many cases because access in suburban job sites is limited. Sometimes, suburban jobs represent the only employment for persons with limited mobility, in order […]
Month: November 2018
Following a consolidation of equipment suppliers, the broadband network market has become mature with a few large players. This potentially leads to less diversity and industry creativity because the barriers to entry are now enormous. Starting a new venture in a mature market like this poses significant challenges. How would you approach funding a new venture in a mature market?
Advice from Chuck Gershman, Founder and Former CEO, Bay Microsystems
First, if you can get the venture off the ground, the opportunity is tremendous because competition for new approaches in a mature market is limited, and large players don’t move quickly. Their incentive is to change slowly to lengthen product life cycles. Rapid innovation is their Achilles’ heel. They are slow to respond to a market disrupter.
The downside to start-up innovators in a mature market is a diminished number of financiers interested in the space because of the barriers to entry, and because the most likely exit is an M&A play at low multiples. An entrepreneur needs to find a financier who understands the market space and can see the value in the new technology.
Given this reality, how do show potential sufficient to attract investors? In the hardware space, you must demonstrate a convincing go-to-market strategy with modest investment and a moderate cost of market penetration. The challenge is this: if the cost of success is high, it requires too much investment – and too much risk – before you can accurately assess the possibility of market success.
* You must be able to show a substantial total available market.