Questions about business market and product

The interview continued with questions about market situation, how well start-ups know the market, what are their initial and future markets, what are they doing to get a good position in this market, what are characteristics that distinguish them from competitors in market and consequently give them competitive advantage. To overcame market difficulties high quality product is necessary, questions about product and its characteristics which attract investors and customers were discussed.

Initial market focus for I3P start-ups was mainly focused in close markets, SME in Italy were targeted. Their first intentions were to create a market presence, get known and create partnership system integrator. These characteristics are for start-ups which have a specific market, there were other start-ups especially fintech ones based on new technology, cryptocurrency, blockchain, carbon credit etc., for which there is no existing market and they have to work very hard and create a place for themselves in the big market. Another type of start-ups were the ones who were working in both directions B2B and B2C, most of these start-ups had problem on defining which path to choose first, and being confused they tried to carry on with both of them which made their operations difficult and affect success. They were struggling in defining an initial target, make an assumption and then test in market , after checking the results they could decide to focus on one or if not successful try the other way out, to see which of this ways would be disruptive and put the market into movement.

Future market focus for start-ups without an existing market, was to bring their idea to mass product, after creating the market, they wanted to be accepted, grow and expand in bigger markets. Start-ups with both services B2B and B2C were still not clear and deciding which direction to follow. While start-ups with an existing market, after growing national they wanted to expand internationally mainly in Europe, and their future dream was to touch USA market. What was interesting, were the start-ups mainly the ones which had developed useful apps, they wanted to expand in Asia because of importance Asian people give to technology and high number of apps they use in everyday life.

A list of market and product elements, and their importance for investors and company itself were evaluated and their comments are synthesised below.

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• Considerable market size and profitability

Almost all start-ups were like minded for market size and its profitability, they stated that this elements affect directly their success, so are very important for company but for investors as well ,capital owners want to see that market is valuable and can generate money.

• Potential growth

Potential growth is a barometer for investment interest from public and private investors. I3P start-ups stated the importance of usage of methods to increase production, workface and generate higher profit. New business should be able to show that they are able to move on from niche market to a greater operation volume.

• Right time and place

Time and place are important for start-ups, but investors don’t care if you haven’t studied well the market society readiness, or if you aren’t able to make your idea acceptable among customers. I3P start-ups say a good previous market research, and luck are important factors.

• Company competitors and barriers to entry

The presence of powerful competitors and obstacles to enter market, makes start-ups life more severe. There should be good analysation of situation and knowledge on what we are going to face, state start-ups.

• Value as a core concept

Start-ups claimed that value is relative, in concept a product or service can be very valuable, but it might be the case when customers don’t consider it important, causing start-ups to fail.

• Unique product (differentiation and competitive advantage)

All I3P start-ups were trying to develop products which are exclusive, bring value to society and able to create competitive advantage.

• Readiness of society(market) to accept your offer

This factor importance was relatively very low for start-ups, they declared that markets most of time are not ready for new and disruptive technologies even when they are ready, strong marketing ,WOM and other techniques are used to increase product likeliness and convince society for its usefulness.

• Presence of necessary resources to accommodate the growth of new market

Not much thought was expressed in this topic, which I find disturbing because if the product is completely new, like the case of electric car, when infrastructure for charging was missing, then this would cause problems for growth in market, also legislations are important factors which were not taken very seriously by start-ups.

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• Industry productivity

Even this factor was not taken in consideration by start-ups. Again, industry productivity is important for you to be productive also a good indicator of your performance, you have to perform extremely well, actually overperform market competitors to convince investors you are good because in productive industry you are not going to get credits for only performing good instead you need to be great.

• Well - defined Canvas business model and business plan

This was the surprising element, Polito start-ups declared that business plans are not important for investors, and they don’t care about them. Some others would say that this depends on market you are trying to enter, in Europe investor don’t care, in USA they give more attention. Some start-ups tried to prepare qualitative business plan, give lots of work and time to their creation, but when facing market, they would understand that their business plan was not that good.

• Business structured for investment (equity ownership)

Business structure was important for young entrepreneurships because they depend on capital infusions and external investors contributions, so it is crucial to create business structure suitable for investments. They should be ready to give part or sometimes even all the shares of their business.

• Long term sustainability

To be able to be sustainable and hold that sustainability for a long time is necessary for becoming big and winning a position in the market. Start-ups ability to be flexible to continuous change in technology and purchaser’s needs, to be focused on right strategic goals will make their life in the market, longer and more rewarding.

• Presence of intellectual property

IP was very important for start-ups who had developed new technologies and could earn economic value from IP. Some of start-ups had applied for IP rights and others would claim their importance and their intention for applying as soon as possible.

• Traction (act, proof of concept)

A clarification of this term: Business traction is related to the company’s success and momentum it is gaining as the business grows. When, traction is missing sales dry up and customer base decreases, despite the work you put in enterprise. Measuring traction can be difficult but customer reaction and revenue can be considered as indicators of progress and victory. The idea behind traction is to grow the business while achieving a particular goal and objectives. Traction helps start-ups to understand their position in industry and where they aim to be.

The concept of traction is important not only to organization internal stakeholders, but also equally important to external stakeholders and mainly investors who are interested in these businesses. The higher the traction, higher is the investor interest therefore higher capital fund given to support your business success. (Anderson, 2018) This term was explained because during interviews I was shocked from the fact that except two or three entrepreneurs, most of them would not know importance and meaning of this term. The ones who knew expressed that it is fundamental.

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