Zen stone path

Let’s assume you are an investor, either an angel investor or part of a VC and want to invest in a technology start up. What do you look for to de-risk your investment? You will probably recognise some of these worries, and we provided some solutions that might help.

  1. 🗺️ Scalability: Investors worry about whether the technology can scale effectively as the startup grows. If the technology infrastructure cannot grow smoothly to meet demand, there will be service problems and that will hinder growth.

    💡 Implement scalable architecture from the outset. Use cloud services that can scale resources up or down based on demand. Conduct regular stress testing to identify and address bottlenecks. This is the essence of Shift Left.

  2. 🔓 Security Risks: With cyber threats on the rise, there is a significant concern about the security of the technology used by startups. Data breaches lead to loss of customer trust, legal issues, and financial penalties.

    💡Invest in robust cybersecurity measures, including encryption, regular security audits, and employee training. Implement a comprehensive security policy and ensure compliance with industry standards. The DevSecOps paradigm helps immensely here.

  3. 💰 Business Debt (was technical debt): Startups often prioritize rapid development over perfect code, leading to business debt. This can become a burden as the company grows, requiring significant resources to fix and maintain.

    💡 Prioritize code quality and maintainability. Allocate time for refactoring and addressing business debt regularly. Use automated testing and continuous integration to catch issues early. We have explored this in details in the past.

  4. 🧺 Market Relevance: There is a concern that the technology might become obsolete or irrelevant in a rapidly changing market. Investors want to ensure that the startup’s technology remains competitive and innovative.

    💡 Stay updated with industry trends and continuously innovate. Engage with customers to understand their evolving needs and adapt the technology accordingly. This is the essence of Agile: quick feedback loops.

  5. 🔗Integration Challenges: Startups frequently need to integrate their technology with existing systems or third-party services. Compatibility issues can lead to delays and additional costs.

    💡 Use open standards and APIs to ensure compatibility with other systems. Conduct thorough testing during the integration phase and maintain clear documentation.

  6. 🧑‍⚖️ Regulatory Compliance: Depending on the industry, startups may need to comply with various regulations (e.g., GDPR, HIPAA). Non-compliance can result in legal consequences and damage to the company’s reputation.

    💡 Stay informed about relevant regulations and ensure the technology complies with them. Conduct regular audits and maintain documentation to demonstrate compliance.

  7. 🙍Dependence on Key Personnel: In many startups, critical technological knowledge resides with a few key individuals. If these individuals leave, it can create significant risks for the continuity and development of the technology.

    💡 Document processes and knowledge thoroughly. Foster a culture of knowledge sharing and cross-train team members. Consider key person insurance to mitigate risks associated with the loss of critical personnel.

Please do note how often robust testing is mentioned in the solutions. Software Quality Assurance is a must-have, even at the earliest stages.

All the solutions presented here are things we are experts on. Do not hesitate to reach out to have a conversation!