Funding New Ideas

How do you get new ideas funded today?  There have been some interesting posts this week on the topics of How to Fix Venture Capital and Why opposing the  Northwest/Delta merger is dumb. Both got me to thinking about a fundamental problem we seem to have today in business. Whether I look at from the bottom-up as an entrepreneur or from the top-down as a big company executive, it seems to me that the very engine that drives our economic growth is in jeopardy.

When did we become so risk averse to new investments?

It's almost as if we equate new investments these days with money up in smoke. And breakouts like Google or Salesforce.com as more luck than anything else. In fact, as Umair Hague points out in his Harvard Business Review blog on the Edge Economy, many really big ideas were funded to be acquired in the last decade. He asks a pretty poignant question ... what if Google had taken the $3B it was offered in 2002 when it was half the size of Yahoo and became the search product line of one of the big three portals? His challenge to the VC industry is to embrace the environment that allowed them to emerge as a platform for growth of the industry with all of their investments. 

Similarly, Greg Strouse looked at the problem from the other end and asks incredulously why anyone would speak out about the dangers of Northwest and Delta merging. Putting aside paid special interests creating mouthpieces on news shows, why would we have any fear that putting two failed big companies together would negatively impact the customer? The markets have consistently shown that this type of end of life cycle mergers only spawn bigger opportunities for new entrants to emerge. Do we think that noone out there is capable of creating a new kind of carrier that can deal with the realities of high fuel costs and a buyer demanding more flexible services? 

Unless we're afraid that we no longer have the stomach to find, fund and launch new ideas. 

This seems to me to be the single biggest thing to worry about in the economic environment we have just moved into. Short recession, long, non-event ... who knows?  But, the relatively speaking continual decline of new offerings being launched to market is eroding our global advantage as a leader. Rather than whine about it though, I'm thinking its time to align to the new realities of a conservative investment community and begin to pragmatically identify real 'tuned in' ideas for funding.

The process we discovered and documented in our book seems to me to be the perfect filter in todays environment for funding a new idea. It focuses on finding a discrete problem in a target buying audience that is quantifiable ... and then adds the innovation to create an experience and marketing idea that will resonate authentically with it's audience. Why is this a great approach to run your new investments through?  Because it filters out fads and finds fundable ideas that are sustainable.

Every success story we uncovered in our Tuned In research had these fundamental elements at their core. They also had leaders, teams and yes ... investors ... that bought into the mission and embraced it for the long haul. Maybe it's time we started following their lead. If you put your new idea through the Tuned In filter, it's much more fundable!