If you visit the investment criteria section of enough venture firms websites you'll can make one simple observation. They all say roughly the same things. You'll notice that every firm is looking for opportunities in large addressable markets with "white space"; technology that is "disruptive" and well protected, blah, blah, blah. One criteria that I would like to talk about is the notion of a "platform technology". Characterizing a technology as being a platform technology is a fancy way of saying the core technology could spin off many different products to many different vertical markets. Venture investors look for platform technologies because you can envision a large company built on the backs of a core, well protected technology. A good example of a platform technology is the fuel cell technology in Tekion, one of my portfolio companies. Tekion has a thoroughly patented technologies based on formic acid which is a unique fuel type. They have the opportunity to pursue many different products from lap top energy sources to cell phones.
Let me get to the point. Having many different opportunities is a blessing over the long run because the company will be flush with opportunities to generate new revenue streams. On the other hand, it is a curse because the company has to avoid the temptation to pursue all of these opportunities during the start-up phase. Staying focused is the most critical discipline a start-up team must posses. It is easy to get derailed chasing the next big fish, especially when the big fish come to you. Additionally, the start-up has to make a few bets early on that will make or break the company. I focus most of my time on developing companies based on "platform technologies" that come out of research from Universities. Honing in on an initial product and market to focus on is the biggest challenge primarily because there are so many variables that are tough to quantify with such limited resources. At the end of the day, the key is matching the unique capabilities of the technology with an urgent market pain point. Believe me, easier said than done.
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