Some time ago, the department of a large international high-tech company I’ve worked for years closed after a long period of uncertainty. Because we saw opportunities in a restart working for the competition, we tried to achieve this with a group of 30 engineers. Soon there were several potential companies who wanted to assign projects to us as part of their own organization, but also to us as a design house. Since the acquisition of a group of 30 engineers prooved to be a quite costly affair to a number of parties, we seriously investigated the possibility to be independent. It turned out to be a serious problem that during the months an increasing number of team members dropped out because they had found a job elsewhere. It did not spoil our enthusiasm! Every day we came together to discuss progress and strategy. We planned everything on their own, using our own network to do the job.
We have been surrounded by people for specific issues where our expertise was not sufficient: contracts and finances. We even had our own website, though it was not online. To our great disappointment all potential customers eventually dropped. They obviously dared do not to make a positive decision, despite the fact that together we possess more than 300 years of experience in our specialty and we have an excellent international reputation. Apparently this is the wrong time to start a business in high-tech. What is your opinion?
The headhunter says:
Starting a company in the sector in which you operate is certainly not easy. Obtaining venture capital is extremely difficult. The reason is simple: with the development of new products millions are involved and competition is fierce. Therefore, investors will only want to do business with you if the risk is very limited and the financial gains are high.
When you move into a market that is growing strongly and you are going to make a product that will stun the competition funding is certainly possible. But even in that case there will be a number of hard requirements. Not only will you need to have a strong team in which all technical functions are represented, also the team must be led by experienced management. When assess the initiative of your team particularly the latter requirement pinches.
Because the manager of the team did not participate in the initiative, it lacked an essential condition to make it to a success. By the way, it is even questionable whether it would be successful with that manager, because in the field of business in the high tech sector, he also had only limited experience.
However, in this country there are enough entrepreneurs and consultants who have enough experience and a very good reputation. Why didn’t you use your energy to involve an industry veteran in your initiative rather than reinvent the wheel for the umpteenth time? With a figurehead with a relevant network in the industry and financial world and the necessary know-how on technical, commercial and organizational issues, the startup would much more likely been successful.
It is all too easy to blame the economic situation for your own failures. Everywhere new companies in the hightech sector are founded just like the last five years.