Ask Slashdot: How Do You Sell an Algorithm To Venture Capitalists? 205
dryriver writes "Dear Slashdotters, We are a two man crew who have spent almost three years developing a video processing algorithm that 'upgrades' the visual quality of digital video footage. We take video footage that is "of average quality" — think an amateur shooting on a cheap digital camcorder or on a smartphone camera — and use various mathematical tricks we have developed to make the footage look better — optically sharper, better lit, more vivid colours, improved contrast, enhanced sense of three-dimensionality and of 'being-there realism.' In about a month, we will be presenting our algorithm to some venture capitalists. We have the obligatory before-and-after video demos prepared for this, of course. But there will also be a short PowerPoint presentation where we explain our tech in some detail. Now here is our main question: What, in your opinion, should we — or indeed should we NOT — put in the PowerPoint presentation to impress a Venture Capitalist? Should we talk about how we developed the algorithm at all — what kind of R&D and testing was involved? Should we try to walk the VCs through how our algorithm works under the hood — simplified a bit for a 'non-engineer' audience of course? Or should we stick to talking about market potential, marketing strategy & money-related stuff only? If you were in our shoes — presenting a digital video-quality improvement technology to professional VCs — what would and would you not put in your PowerPoint? Any advice on this from Slashdotters with some experience would be most welcome!"
Tell them (Score:5, Insightful)
Re:Tell them (Score:5, Insightful)
how it will make them money.
Bingo. VCs don't invest in algorithms. They invest in businesses. They will want to look at your business plan, and you need to have one that looks professional. Make sure you spell check it. They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea. If your plan is to license your algorithm, then they will want to know if you have any OEMs lined up. If you plan to produce your own products, they will want to know what experience you have at marketing and production. They will want to see a team with a balance of tech, finance, marketing and operations.
Here is question for you: Why do you think you need VC money? Businesses are often better off without it, and even those that benefit from it often seek it too early. It is best to only seek VC money when your business is viable and growing, and you are ready to "get big fast".
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They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea.
Even if it gets patented, it's probably not going to stop anyone from using his idea. Math sort of works for everyone the same way.
Re:Tell them (Score:4, Funny)
Math sort of works for everyone the same way.
Clearly you weren't in my high school algebra class.
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They will likely also ask if your algorithm is patented, and if not, what is going to stop someone else from using your idea.
Even if it gets patented, it's probably not going to stop anyone from using his idea. Math sort of works for everyone the same way.
It's not going to stop open source and homebrew people from using it, but that's not where the money is to be made anyway. It's licenses sold to commercial software companies like Adobe, or hardware companies like Apple, where the money will be made. In fact, if the algorithms are as good as you claim, I wouldn't be surprised if a large company offered to buy the entire patent portfolio outright.
Re:Tell them (Score:5, Insightful)
"VCs don't invest in algorithms." Not just bingo, but double bingo. They do invest in products and in people and you damn well need to know which you're pitching to them.
Do you just want to sell your software product? And please think of it as a product, not an "algorithm". VCs want to get in on the next Microsoft or Apple or Adobe or whatever - none of which sell "algorithms". And they typically don't want to just buy an idea around which they have to build a company.
Or do you want to build a business selling that product? If so, do either of the two of you have heavy sales and/or management experience? If you don't (or even if you do but don't come across as "dynamic" and "take charge") you will be replaced by the team chosen by the VCs. Which will leave you out in the cold wondering what happened.
And VCs are looking for high multiples of return to investment. They may promise vast sums of money but there will be strings and milestones and penalties for missing the milestones. They often demand a large percentage ownership of your company if you succeed and ownership of your patents if you don't.
Enter this with your eyes wide open while remembering that there is no free lunch and that although you may need their money, they don't need you.
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On top of this - why is your solution better than what's out there now? There are many similar products and services that improve video quality in one or more ways. Don't get caught if one of them knows your competition better than you - you need to know them all like the back of your hand, and why you're going to blow them out of the water.
Then, once you've blown everybody else out of the water, what's to keep them from entering the market too? Patents? Trade secrets? Difficulty? How will you continue to m
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Agreed. Spend your few remaining days making sure you know the competition, even if you don't think they are competition. You have to explain why their packages are really what you're "selling".
Something like "While X product is a good product and does this one small bit similarly to our Product (not algorithm), ours clearly differentiates itself."
Then list the ways. Keep the list to the top 3 to 5 ways, and add on "among other ways". Keep new ways you haven't thought of open ended. I call this the GEICO "U
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Why do you think you need VC money?
Yes, be specific. Does the algorithm already work? If so, why aren't you selling it as a plugin for all the popular video processing programs? Do you need to hire more developers to make that happen? Does the algorithm need refactoring engineering to make it usable? Have you already done that and you need marketing money? Are you trying to build a web service and you need money to build out infrastructure that you can't do with cloud servers?
Without knowing why you n
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One of the big parts of showing "how it will make them more money" is also in showing them: how it improves upon existing content. New content being produced on RED Scarlets are already being down sampled to display on cinema, let alone the many TVs that people have.
However, think about how much is spent remastering film, or television...
A production studio that is worth anything is already going to have some nice cameras, thereby making your technology "cool, but not of value".
For what it is worth, I have
Re:Tell them (Score:5, Interesting)
Hell, just whip up a website that lets users upload a video and get a link back to the improved version of video (use cloud compute for the first few months if needed.)
Get some word of mouth (look at Youtube videos that could benefit - mail the uploaders.) If people actually use it, you can and will get buzz fast on the tech sites.
If you have growing users/day, the VC pitch will be much easier.
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Or even better, may be able to sidestep the need for VC altogether.
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A production studio that is worth anything is already going to have some nice cameras, thereby making your technology "cool, but not of value".
Did you even read this part?
We take video footage that is "of average quality" — think an amateur shooting on a cheap digital camcorder or on a smartphone camera
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It will smell like money to them if you can generate hype for the technology before they even see it.
Try posting an Ask Slashdot question where you can tease the technology, spilling plenty of detail without giving away the maths. That will whet the appetites of the digerati general population and start up the hype engine.
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Oh, and once you have it legally protected, post some before and after videos showing how miraculous the new tech is. Post links back to Slashdot again, and Reddit, lining back to the
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Bleh, use the words 'nano', 'green', 'crowdsourced' and 'cloud', doesn't matter what the rest of the words are, and walk away with teh monies. They aren't interested in a good product, they're interested in pumping up another bubble in something as quickly as they can and selling off their piece of it near the peak. Use the words they think will get the hoi polloi chattering and you're golden.
Comment removed (Score:5, Funny)
Re:Tell them (Score:5, Insightful)
The #1 mistake techies make when talking to investors is that they don't have the financial picture worked out. They think the tech will impress, and sell itself. If it will at all, then only to other techies, who are commonly not the ones you call VCs.
If you don't have someone on the team who knows finances yet, get them before it is too late. If they ask you what your revenue will be after 6 months, have the answer ready. If they ask you what your profit will be after 2 years, have the answer ready. As for the tech, forget about it, anything they are going to ask about that (haha, as if) you can answer straight away or draw out on the back of a napkin. Get your figures in a row, nicely tabulated and worked out. Tell them exactly how much it's going to cost them, when, how long before you break even, how long before THEY break even, how much profit they are going to make after 2 years, 3 years, 5 years, etc etc.
Keep in mind that you may not get a second chance. I have no idea what tech you have developed but the days of huge, unexpected advances in video processing are over. You may be ahead of the curve now, but if you don't get your show on the road, 6 months from now someone else will come up with something better. So get it right this time, there are no practice runs. Frankly if you already have the meeting set up and at this point need to go to ask/. to get advice, I'd say you may already be too late with that though.
Re: Tell them (Score:2)
Re: (Score:2)
This. You don't need to sell them on the tech, you need to sell them on your ability to sell the tech and profit. That is all.
Re:Tell them (Score:5, Insightful)
how it will make them money.
This. This is step one. Always has been.
Step two is to explain what is going to stop Microsoft/Apple/Google from copying incorporating your algorithm (patented or not) into their existing products/services and making you irrelevant. This has been step two since before Web 2.0, though it traditionally referred only to Microsoft.
Step three (optional, but helpful in pitching to VCs) is explaining how you plan to get Microsoft/Apple/Google to buy your company before it reaches maturity (or even adolescence in some states/Valleys) so they can incorporate your algorithm into their existing products/services. Hint: user base. It doesn't matter if your algorithm is the most obvious thing in the world... if you have millions of people using it for free they will want it. This has emerged as step three in the last 5-10 years.
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how it will make them money.
That, and how the competition won't catch up with you. Be sure to mention any and all patents that you have.
Re:Tell them Who Buys It? (Score:3)
As others have said, 'It is all about how the business makes cash.'
Who buys it, why and for how much money?
Is it an online processing via a web portal & FTP or does the customer license for use on a PC/Mac/Linux?
Bo.
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Re:Tell them (Score:4, Interesting)
how it will make them money.
... And then play a single 'Enhance... enhance... enhance... print that!' scene from CSI and say, 'We do that.'
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Bingo! (Score:2)
A list of patentable features of the algorithm would be right at the top of my list as well. If you can also show lack of existing patents covering any aspects of your code that would be good too.
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This is exactly right. Show them the before/after videos, tell them how proprietary your algorithms are, and give them a market analysis that shows why somebody will buy your tech/company, etc. The VCs want to invest and then transfer the risk asap to an acquiring entity or to the public sector (IPO). They don't care about the technology beyond its ability to get to that outcome.
Re:Tell them (Score:5, Funny)
Step one: Inscribe a pentagram on the floor around your feet, placing a 100-dollar bill at each of the 5 cardinal points.
Step two: Face the direction of the nearest cemetery and intone the words: "I offer my soul for the venture partner".
Step three: This will take care of itself...
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That all depends (Score:5, Funny)
Re:That all depends (Score:5, Interesting)
You raise a good point. Be sure to cover all the patents you have on your algorithms. Anyone investing will want to know that they won't be copied the moment they are demonstrated publicly.
You did patent it, right? It isn't obvious or just a combination of existing ideas, right?
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You did patent it, right? It isn't obvious or just a combination of existing ideas, right?
In practice, the latter is no real bar to the former...
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You did patent it, right? It isn't obvious or just a combination of existing ideas, right?
Since when has being obvious or a direct copy of prior art stopped the patent office from approving a patent?
Sadly, not for a long long time.
If the audience is VC's (Score:2)
There would be exactly one powerpoint slide that goes something like this:
1. Take the consumer's crappy video.
2. Run it through our patent pending thingy and make it look nice.
3. Profit!
ROI (Score:5, Insightful)
Re: (Score:3)
Related to this, ultimately what matters is the business plan. That will imply a few things...
1 - Why is this algorithm better than what's out there?
2 - Why can't anybody else do what this does? (Patents, at least.)
3 - Why you can't make money with it now, and how you will make money with it if they invest.
Frankly, without a lot more information, I'd be highly skeptical about investing in a video processing algorithm. Are you trying to productize it? Investing in product development is a very different
Don't Do It (Score:4, Insightful)
Don't give your future away by taking money from VCs for this. It sounds like you have enough already to write a small standalone processor for video files and charge money for it. You give up a lot - everything if you're not careful - when you do a deal with VCs. If you can build a company with any profits at all on your own, do it.
from experience (Score:5, Insightful)
Some things a VC will ask you (Score:5, Informative)
1. Do you have Patents on the Technology?
2. What kind of money are people/corporations willing to pay for this type of video enhancement?
3. How big is the market? (e.g. Can you deploy the technology in a smartphone app, or does it require specialized hardware)
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How are you going to get someone to pay for it? (direct cash payment doesn't seem to work so well in the Internet world, and injecting ads in the final product is pretty much a death sentence).
money talks (Score:2)
a) What your doing will sell and sell well, hopefully you have the market research behind this.
b) Your ideas are original, can't be easily copied by competitors or you have the patents/copyright behind it and you should be able to articulate this.
c) a good demo and complete openness when it comes to them asking questions, you need to be ab
Answer: You Don't. (Score:5, Interesting)
Or, alternatively, you should start by licensing the technology to those interested first (figure out who) and create a steady income from there.
Or create a product that end users might find useful directly, like an iOS app.
One example of successful business model based on an algorithm is elastique [zplane.de], which is used in pretty much all major audio and DJ apps.
Hope this info is useful!
Re:Answer: You Don't. (Score:5, Insightful)
* Market
* Product
* Customers
* Technology
* Development Plan
* Distribution Plan
* Team
* Competition
* Financial Projections
* Exit strategy
If you drone on about the specifics of the technology, they will get bored, and will think that you do not have interest in putting in the "other" work necessary to get a business off the ground.
Lastly, avoid VCs if you can. They care only about ROI and will be constantly breathing down your neck. Rather, get a few articles into trade mags if you can, then solicit big companies. Your best bet may be an exit strategy of "Exit upon sale" of the technology. The buyer may also hire you on for a while, but don't count on that lasting after you've spilled all of the beans.
And last-lastly---at a minimum, file a Provisional Patent with the USPTO. That protects you for up to a year, and costs like $75. A full patent is more like $15k.
And keep your secrets close to your chest. Tell people what it does, but not how it does it.
DISCLAIMER: I'm a small-business owner and patent holder.
"Enhance, zoom in!" (Score:5, Funny)
Re: (Score:3)
Make sure you test it against reflections in a mirror [youtube.com] too.
Re:"Enhance, zoom in!" (Score:5, Informative)
I spent ten years of my life building a company based on selling a mathematical idea. I had the 1 in 1000 companies that got venture capitalism, grew to over 50 people and then died in the credit crunch: leaving me nearly bankrupt, 10 years older and a lot wiser
It's very hard. Be really sure you want to do it.
Do your bookwork first: Read "Crossing the Chasm", "Lean Startup","Prime Solution Selling","Black Swan".
Read blogs: I find the Equity Kicker very good. There are many others
Realise that if you do succeed it will be through blind luck (if I get hammered by other posters, would the other posters just explain that they HAVE read Black Swan and that they can disprove his thesis: not by example but by maths)
The comments above are very good. I partially disagree with the comment about the business plan. In my experience (limited to about 10 VCs, and 1 multi-million dollar successful investment) VCs care only about "the people that are creating the company". Do they have the technical, the managerial and the marketing skills to make this work? Business plans are works of fiction,and the VCs know that. Having said that you still need one, but you need also to demonstrate that you know its a work of fiction, but the potential it describes is real
Most importantly realise that this is your life for the next ten years, and that the most likely outcome is that you will fail.
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Louis Pasteur, “Fortune favors the prepared mind.”
I think you need to reread Nassim Nicholas Taleb’s The Black Swan, for he says no such thing. Not that it is random but that it cannot be molded. It has fat tails - this means the world is less calm then you think. Have reserves so when unexpected disaster strikes it does not wipe you out. Take a lot of small risks with big payoffs. Never risk more than you can lose.
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This should somehow get a bonus mod above the "5" score. We should somehow flag posts that are first person, "been there, done it and understand it." I would add that not only should you read those publications he (AC) cites, but also, if you have time Google other startups the VC has funded. Just perhaps, you know one of them. Perhaps, you know someone who knows them. You get the idea. Call them. Don't talk specifics about your plan, or theirs, but get an idea of what the VC's non-verbals gave away.
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http://www.youtube.com/watch?v=KUFkb0d1kbU [youtube.com]
A decade ago I would have laughed at this. These days, it just makes me sad how many people cannot explain why this is impossible, when I already figured it would never be possible, even when I was a kid.
Shark Tank, other ideas (Score:3)
As people has said, know your audience and what they expect.
Watch a few episodes of “Shark Tank”. Its entertainment so don’t take it as gospel. But it does show a lot of people doing rookie mistakes. Such as talking about how big the market is and if we can only get a sliver.
Also, focus on making a clean presentation.
Make sure all of the programs you will be using are up and running prior to the presentation – don’t start the programs in the middle – you are just asking for problems. Turn off everything else – in particular things that pop up.
Little errors & inconsistences make it seem you have a half-baked product.
There is a fine line between confidence and arrogance, between insecurity and honesty (I am assuming your product is not 100% perfect yet). . Find that line before you go in.
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(I'm pretty sure I read that in a Po Bronson book/article, so take it with a salt lick.)
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Or if you are in the UK, watch "Dragon's Den". I guess its the same thing. Which came first, the sharks or the dragons?
For those who've seen neither, entrepreneurs parade in front of four or five potential investors sitting in comfy chairs with big wadges of cash. The entrepreneurs present their product, forget their business plan, stumble their lines and generally embarrass themselves. The investors grill them, and then one by one they all say "your numbers don't add up, I'm out", or "you've not got a prod
A Word About Angel Investors... (Score:3)
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Tell them broad strokes, not enough to figure it out. Remember that they're called Angel Investors because they can swoop in, take your idea, and do it themselves with their own money. Otherwise, most advice here is solid. They want to see how you develop it, what the exits are, and how much they can reasonably make.
Remember that they're called Angel Investors because they can swoop in, take your idea, and do it themselves with their own money.
This happens far less often than you'd think. That same investor still needs a platform to implement the 'stolen' ideas, so if you've already done the initial hard yards, why not use you.
Unfortunately, in so many cases the 'ideas' are obvious enough to be already in the pipeline of one or more companies already operating in that industry (one of which might be part of an investor's portfolio). Approach enough investors, and the probability of this being true approaches certainty.
Investors generally don't ru
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FYI: Angel investors and venture capital is not the same thing.
Angels are usually wealthy individuals who want something to do with their money.
VC involves cut throat money managers playing with other people's money.
Both of them try for massive ROI, but angels don't always have monetary rewards as their motivation.
Where is version 2 and 3 ? (Score:4, Interesting)
If you can explain it in ways they can understand then its probably not worth much and if you do explain it they can share it with others.
You're really lucky you have an algo where they can see the effect, leave it like that.
They want a cash flow over time, which means:
1: Patent protection
2: A version 2,3,4,5, read up on Dolby Studios, they started decades ago doing the same thing but for hissy audio tape, still going N versions later on totally different media.
3: Get the word "mobile" in this. VCs are obsessed with mobile currently, I assume this will make phone pictures better ?
4: They want an exit strategy, is this going to be sold to join people's patent armouries or a firm they can float ?
5. Have you talked to Google, this sound like just what they might want for YouTube and to stop others getting it.
Patent pending (Score:2)
Different strategy (Score:5, Interesting)
Here's my take. As others have stated VC's are in this for money, thus you show them the business case and that incudes explaining the barrier to entry - why another 2 bright guys, suitably funded couldn't easily reproduce your efforts. Now my real advice is this: VC's are not interested in small play's, they want to put a significant chunk of money in, and take a large multiple on that back. What that means is they are interested in large $$ opportunities that may take some time to come to fruition ...and that involves plenty things that can go wrong along the way leaving you with nothing to show for it. You are 2 guys, you already have something you think is very impressive to show, you don't really need lots of capital to continue development, it's really just your time. Go shop this to the incumbents in the applicable spaces looking for an immediate sale, Adobe/Apple in authoring S/W, google/vimeo on the backend, go-pro/contour/canon/nikon etc etc on the consumer H/W side. What you are looking for is enough money for the 2 of you to have a nice 7 figure bank balance..which means sell it, go work for the buyer for a while, take the money now whilst there is no obvious competition or the market changes and minimize the risk. Don't hold out to be a bizzilionaire, the chances not matter how good it is are vanishingly small.
Does it actually work (Score:3)
Do you have any examples of your 'algorithm' that show it to be something other than run-of-the-mill?
Re: (Score:3)
I've seen a whole lot of video enhancement 'algorithms', boxes, programs, etc. Not one of the press-button-get-video variants have actually improved video quality, and almost universally they just make things worse; more often than not, they just shove up contrast and saturation and add an unsharp mask, but some are genuinely innovative in their uglyness (e.g. the dreaded WarpSharp, Q-Tec's BD butchery, etc). The vast majority of 'easy to use' variants, with a few sliders to move about or checkboxes to flip, are equally ineffective.
Do you have any examples of your 'algorithm' that show it to be something other than run-of-the-mill?
Video has some interest possibilities for enhancement unlike a single static image though. If the camera or the image is moving, you can extrapolate higher resolution details than what's in the based video stream resolution. If the camera is slowly panned sideways in one direction so that the next frame is aligned 1/2-pixel off from the previous frame, with some mathematical trickery using the successive frames you've effectively increased your horizontal resolution. You can do similar tricks if the obje
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If the camera is slowly panned sideways in one direction so that the next frame is aligned 1/2-pixel off from the previous frame, with some mathematical trickery using the successive frames you've effectively increased your horizontal resolution.
That's a big if. It certainly won't get you anywhere near the improvement you'd see just by investigating in a better camera.
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The big problem with 'magic' video enhancers is that mathematically, CODECs are already very, very good at identifying easy to optimise bits of video, so anything your algorithm does is either totally redundant, or just makes things harder to compress (and thus lower quality at the same bitrate, or
How are you going to make them money? (Score:2)
Tell the VCs how you are going to make them rich.
Crowdsource it (Score:3, Interesting)
What is important to VCs is very different ... (Score:3)
(1) The team is most important. Have you assembled a team with the necessary experience to convert an idea into a successful product. VCs mostly invest in people, not so much ideas. Ideas are plentiful, people that can ***deliver*** are not.
(2) The idea is of secondary importance, but it must be something that can be protected by ***patents*** and/or other intellectual property. It does not matter how good the idea is if it is something that can be replicated by others.
We have the obligatory before-and-after video demos prepared for this, of course. But there will also be a short PowerPoint presentation where we explain our tech in some detail. Now here is our main question: What, in your opinion, should we — or indeed should we NOT — put in the PowerPoint presentation to impress a Venture Capitalist?
Give them an overview of the process. High light the points that can be protected by ***patents*** and other forms of relevant intellectual property.
Should we talk about how we developed the algorithm at all — what kind of R&D and testing was involved? Should we try to walk the VCs through how our algorithm works under the hood — simplified a bit for a 'non-engineer' audience of course?
They will not care beyond determining that the algorithm is in fact ***your creation*** and not related to previous employment or other potential conflicts.
Or should we stick to talking about market potential, marketing strategy & money-related stuff only?
They both care and don't care about this. They care in the context of determining if you are being realistic. Have three sets of numbers. One covering the scenario if things go as planned, another more pessimistic one, and another more optimistic one. The pessimistic one should not lose money.
That said, they will not trust your numbers. They will do their own research and do their own numbers. Do not let this deter you from doing the best job you can on your numbers. You are being ***tested***.
This. (Score:2)
(1) The team is most important. Have you assembled a team with the necessary experience to convert an idea into a successful product. VCs mostly invest in people, not so much ideas. Ideas are plentiful, people that can ***deliver*** are not.
Parent is dead on. You really need to have an excellent team, and because you're seeking financing that excellent team has to have the resumes to prove their excellence. Find someone who has actually brought one or more products like yours to market and bring them on board. It may cost a lot, but it greatly increases your chances, both of success and of getting investors on-board.
Re: (Score:2)
The only thing I disagree with your post on is "The pessimistic one should not lose money.". VC's are used to losing money on some projects, fixing projections to say there is no risk is a huge alarm bell for a VC, it implies you haven't done a proper risk analysis or are being unrealistic and calls into question your expected and optimistic projections as well. A VC would much prefer an acknowledgement that the worst case scenario is one where they will lose 50% of their money rather than a ridiculous pie in the sky number that says their is no risk here and worst case you get your money back.
Let me clarify. You should not massage the numbers. You should rework the business and/or product/service. The pessimistic scenario hopefully identifies areas of weakness that you need to address. My understanding is that the VCs view your pessimistic scenario as your most realistic. Again, they will be doing their own research and numbers, your numbers are merely a method to judge how much thought and diligence you have put into the plan. Mentioning that you've gone through such iterations of the business/
Three steps (Score:3)
Talk value (Score:1)
FAB (Score:2)
Feature, Advantage benefit.
For each feature the software has, how is it an advantage and how does it benefit the customer.
Also the one thing VC's really want is data to back up your claims of sales. What market research have you done, Who will buy this product? How many will buy the product? Is it a need, want or nice to have? What are your costs? Is there customer support involved? Is the a mass market or niche market? How will people find your product?
The bottom line for a VC is "How am I going to have a
Re: (Score:2)
Also the one thing VC's really want is data to back up your claims of sales. What market research have you done, Who will buy this product? How many will buy the product? Is it a need, want or nice to have? What are your costs? Is there customer support involved? Is the a mass market or niche market? How will people find your product?
But do not say "if we only capture 1% of giant market X we'll be rich!" Make your case using real numbers. Read books on how to do this. And once you've learned how to do it, relax while doing it: be yourself, but as yourself make the projections. There's a lot on the line, so have fun with it, geek out on it, and do a damn fine job. Like you would coding.
Convince them it is special (Score:1)
I agree with the rest of the posts that it is all about the business case. One critical component is how easy it will be for someone else to duplicate if the business is successful. Patents can be worked around and expose key elements of the technology to examination, so it is OK for someone else to accomplish the same results with a different mechanism. Technically algorithms can't be patented, but you can patent it, if you say its part of a system. So it may be more valuable if you have something so advan
Rule 34 (Score:5, Funny)
It seems we've found Step Two (Score:2)
Are you sure you want VC money? (Score:5, Insightful)
I've worked directly with a lot of VCs and private equity guys.
First question you have to ask is "do I really want VC money?" Make no bones about it, VCs will scalp you. They will take control of the company and there is a good chance you will be pushed out. (No you will not retain control ala Mark Zuckerberg in all likelihood) Furthermore the cost of capital from a VC is VERY VERY high. They expect a big return on their investment. If you can fund your company with Angel investors, loans, friends and family, etc, then do that. You'll come out better in the long run most likely. Most people that think they want VC money really don't. I know it's a bit of a cultural thing in Silicon Valley but even the VCs will tell you that you don't want their money if you don't need it.
If you decide that VC money is still the best way to go then yes they will want to see the technical details of your product. They will do considerable due diligence regarding it and they will call in experts they trust to look it over. However you don't need to get carried away with technical details in the initial meetings. What they are going to be looking for is a business model around the technology that they can develop. VCs aren't typically going to want to develop the business themselves - they want to invest in people who are going to develop the business. They may bring in their own people to help or take over if needed. So what you need is to be able to explain very concisely who you are and why you are worth investing in, why this technology matters, what the market opportunity is, who the competition is and how you will overcome them, and how the VCs will be able to get a return on their investment. You should be able to say all of the above in 60 seconds or less.
Don't assume your technology is unique from a business standpoint - it probably isn't. There will be competing products out there and you'll need to explain why your technology is special and more importantly why you and your team are especially positioned to take advantage of whatever market opportunity you see.
Frankly VCs will be less interested in the technical details than in is your business plan and especially in the team you have around you to execute said business plan. VCs really don't invest as much in technology as they do in the people who are trying to bring that technology to market. They are investing in YOU more than anything else. Tell them about your leadership team. Show them your team has a track record of bringing technologies to market successfully. Guys like Elon Musk can raise money for almost anything because of their track record. If you don't have a track record of building successful businesses, get people on board who do BEFORE you try to talk to VCs. Get a team of advisors who can poke holes in your business plan and help you get on the road to success.
Finally, VCs tend to specialize. Odds are most won't be interested in what you have. Kind of like publishers you have to look around for the right one and you'll probably get a lot of doors (politely) slammed in your face. The VC community is a small one and they tend to all know each other. Don't be rude or talk smack about anyone else because word will get around.
Re: (Score:2)
Why is your algorithm valuable (Score:2)
Don't give them technical details (Score:2)
Do not give them technical details, a before and after video will be enough. If you give them details they may just try and rip you off. If you give them details make sure they are not complete enough to reimplement your work.
Ideally don't deal with Venture Capitalists at all, these people are only interested in taking as much of your business away from you as they can get away with. They can't be trusted.
It sounds like what you really need is a sales guy to go out and sell this technology under license, no
Alternatives (Score:2)
Sure you'll cover the market & the work, but the first thing a clueless VC wants to know is what the competition/alternatives look like. Not in-depth company analyses, but what an average consumer may find & try in 1/2 hour and how poor their results will be.
Also, BusinessWeek has a recent presentation that won major VC buy-in. It's where I got the above tip from & there's probably more to mine from it.
From experience (Score:2)
Number one: a VC expects 5x-10x return on investment. That return is typically from selling to another company (which may itself be a VC). It may also be from revenue but VCs these days are less interested in active revenue. They want to sell the company and move on.
Number two: They don't care so much about the actual techno
legal (Score:2)
Make sure they sign an NDA before you let them see anything.
They aren't going to buy it from you if they can steal it for free.
here it is.. (Score:2)
while(I produce revenue) {
give me money ;
}
take most of whatever is left ;
buy yourself something nice ;
Patent and license (Score:2)
First patent your algorithm
Then license it to chip makers, electronics companies, apple, samsung, etc
Find a sales guy with good contacts and let him sell
Almost every major product these days licenses thousands of patents from tiny start ups like yours for different things
Not just money (Score:2)
The 10, 20, 30 rule (Score:2)
Don't explain the details. (Score:2)
The bottom line is what your product does and how well does it do it. When your car breaks down, all you care about
Not VC (Score:3)
Don't go the VC route: there is enough slashdot anecdotal evidence to make it clear that being impoverished, enslaved, and destroyed is a repeatable experiment.
Don't take it to Apple: The Stoltzfus' (who invented Rosetta Stone) tried that with a previous product, and their failure and loss -- and the point that you never heard of the previous loss are an object lesson.
My advice? Contact the Stoltzfus' in Harrisonburg Va, and ask them to give advice (as a mentor). They might agree. Then give your basic presentation to them. Then listen to the advice, and market the idea yourselves.
VCs May Be the WRONG Approach (Score:2)
Private equity people who have industry insider knowledge about digital video or a company that wants to partner for being able to co-brand or use the technology may be a better partner where they can see a benefit to their current work, clients or product output.
These people may value the product and investment higher than a VC...
I have gone through this before. I have had a pitch where 100+ VCs would not return with an email or other response.
Get the right insider who used to be with "the competition" or
This is a solution looking for a problem. (Score:2)
The people who would most benefit from this technology just don't care about quality. They are the ones who shoot video on their crappy phone handset and upload it at a terrible resolution onto YouTube. Oddly, this has led to the situation where my TV is now capable of playing back full HD content but mostly ends up displaying low grade badly shot footage that looks like it come from 1990's Russia. We can thank YouTube, camera phones, and Tosh.0 for much of this. News broadcasts which I pick up in HD 720/10
Writing a book or article? (Score:2)
How often do you think these are these hypothetical questions that someone posts on Slashdot so they can use the great ideas here to write a magazine article or book? There are quite a lot of good answers here...
Read this article (Score:2)
From the NY Times last Thursday, a fun article about VCs. [nytimes.com] It won't answer all (or maybe any) of your questions but it might give you a sense of what you're thinking of getting into.
Patent, Wait, Sue, Profit (Score:2)
That's how everyone else seems to be doing it now.
why? (Score:2)
If you have good video enhancement software, don't go strait to a VC. The government (read: military) has plenty of programs which will pay you to develop your idea into a tool which will be used with established systems.
If, for some reason, you don't want the military to get its hands on your work, don't try commercialize it. You may as well get the "free" investment out of it. to
Sell them a product, not an algorithm. (Score:2)
Have you heard of pagerank? The algorithm which google ran on? Larry and Sergy couldn't sell it. Your algorithm is worth less.
Sell a product. If you don't have the skills (or time) to make a "Photoshop for videos", make a one-touch "video-improver" app. Explain how it could be extended.
Why VC? (Score:2)
Youtube.com, News Media, and Federal Contracts? (Score:2)
NEWS MEDIA
Your quickest cash is from TV programs which use amateur video, and would be willing to spend significant sums to upgrade video for better broadcast quality. Comedy Central's "Tosh.0" and Warner Bros. syndicated show "TMZ", use immense amounts low quality video. Sell turn key systems to them to generate your quickest cash flow hit. National broadcas
Who wants your stuff? (Score:2)
The most important thing is to show them that there is a demand for what you do. This is where great ideas make it or fail. Henry Ford didn't invent mass production. It's just that nobody thought there would be enough demand for so many automobiles. Same goes for every other successful enterprises. Who would want a personal computer? Who would want a phone without physical buttons?
So who wants your stuff? How much do they want it? How much are they willing to pay for it?
PowerPoint? (Score:2)
Drop that sorry excuse of a program and use Keynote. That will easily give you a more professional image. You guys don't have a Mac? Buy a MacBook even if it's only for your presentation. Think of it as an investment for your VC pitch.
Aspects related to competition, IP, business model (Score:2)
The aspects of the technology that you should talk about are those that are directly related to competition, intellectual property, business model and eventually regulations.
Interestingly, those are also the aspects that interest me as a technology entrepreneur.
Software algorithms to improve the quality of images, in particular optics, is already embedded directly inside the latest mobile phones and works in real time. That software takes into account the defects and bias of each type of lenses to produce t
Re:Just give it to them. (Score:5, Funny)
That's the way it's going to end anyway. At least this way you save time, money, hassle, and the anguish of actually thinking they give a shit about your success.
VC: "Ideas are like assholes, everybody has one and I'm going to get as much money out of selling yours as I can."