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What is wrong with existing startup models?

By Fountech Ventures
October 6, 2020

Most founders of AI startups concentrate their efforts on building an innovative product: a concept that promises to solve a thorny problem and has global market potential. However, most forget that grand plans and intelligent solutions don’t always translate immediately into successful business ventures.

That’s why bridging the gap between a great idea and commercial success requires the same care and diligence that has been spent envisaging the product itself. Defining the right business model is vital to the success of any good idea, and a deft combination of technical and commercial expertise, not to mention connections, mentorship, and strategic investment, are all required.

So, where can tech startups turn to tick all of these boxes?

There are generally three main options available to them: accelerators, VCs and incubators. Individually, each of these models has weaknesses that detract from their ability to offer comprehensive support; whether that is only targeting more advanced businesses, providing limited and generic mentorship, or failing to follow the business’ development once an initial investment has been made.

If we are to truly help the next generation of tech leaders, particularly in the deep tech and AI space, we must re-think the available startup support models.

Reassessing traditional models

 For many fledgling businesses, incubators and accelerators might look to be the perfect solution. Although incubators are designed to offer the workspace, mentorship and, in some cases, the early-stage investment that can help new companies get their feet off the ground, this seemingly complete package usually comes with some caveats.

Often, these models don’t have the in-house tech knowledge necessary to properly develop an idea to its fullest potential, with most mentorship being provided by third parties over a short one or two-year period. Without longer-term support and expertise, incubators and accelerators can be too hands-off and, therefore, not the best placed to add value to the venture.

Likewise, as incubators only provide small amounts of cash to supplement the startups (if any), the onus is mostly on founders to identify and secure early stage investment. This means precious time that could have been spent growing the business and developing the initial premise is instead, spent on fundraising.

With all this in mind, other entrepreneurs might look to angels and VCs to help propel their startup idea, in the hopes that these traditional models will offer more substantial investment, plus a bit of guidance and advice. However, in the vast majority of cases, an early-stage AI startup would just be too early in its inception for VC funding. With the perceived risk of investing too high, there are still too many unknowns at play in the initial stages of a project for VCs and angel investors to take a chance on a largely unproven business.

How Fountech.Ventures can help

Entrepreneurs should instead look to a startup support model that incorporates all of the above and more. Fountech.Ventures developed the In-Cubed Program with the failings of more traditional startup models in mind; carefully melding together all of the key ingredients for commercial success into a thorough package.

Throughout the process, the team immerses themselves as corporate co-founders across numerous fronts. When considering potential startup models, entrepreneurs should look for a program that doesn’t just inject cash into the business, but invests time and knowledge across all critical business areas. Whether this is developing the founders’ skills and capabilities, identifying C-Suite team members as required, or refining the commercial model, it is important that the model goes beyond just funding or generic mentorship. This is an end-to-end support system for early stage deep tech AI startups.

Fountech.Ventures’ business model takes into account the challenges that many startups face in the initial phases of developing their idea. The team is hands-on in all components of the early-stage journey and acts as the strategic investor over the long-term, so that founders can concentrate all of their efforts into building out the business, rather than on the hassle and distraction of investor outreach.

If you want to learn more about the In-Cubed Program, or how Fountech.Ventures can help launch your startup to success, then please get in touch.