New Venture Lab: Equipping Christian Entrepreneurs

Question

We are considering a software venture that would create an online collaborative content creation and editing tool.  There are two main pieces - the content creation/editing tool, and the collaboration tool, which would enable more seamless work by numerous parties on this content, and which would have numerous CRM-like functions to help automate customer interactions.  What are some things to consider in an IT-enabled business services offering like this?  Do you think this is an idea that we could raise venture capital for in order to fund the development and launch of the product?

Answer

The first thing I would recommend is really thorough research to make sure that what you are trying to build does not already exist.  Many times I will think that I have a unique idea, but after a little bit of googling around I discover that there are already hundreds of companies or products that already do exactly what I was thinking about doing. 

Another thing I would recommend is to try to find existing functionality that could simple be tweaked or repurposed to serve the need you have uncovered.  I don't like investing in a capability that already exists, so in terms of the CRM (Customer Relationship Management) features you mentioned, they probably already exist and you can most likely create the additional collaboration features through add-on development work to a pre-existing CRM software application such as Salesforce.com Custom Applications or their AppExchange pre-integrated additional features.

In terms of raising venture capital for your idea, let me start with some sobering data: only 3,000 companies per year get funded by venture capitalist in the U.S, and only 25% of those companies receiving funding in the early stages; i.e. seed or start-up stage.  Some experts estimate that only one in 4,000 companies that seek venture capital actually get it.  Most venture capital investors want to see a product already completed and ready to take to market so the capital they fund is for growth rather than merely funding product development.  This is a key way to manage risk and avoid the much riskier development stage of a business.  Many, many more companies in the development stage get funded by the entrepreneur, friends and family or by angel investors.