Venture Investors typically shape their strategy around:
I predict the future, and I change it.
My resources are constrained.
Some say that underfunding is a noble thing. An inventor, starting a company with a thousand dollars and growing it to make millions is laudable. This route is feasible for venturing smallish inventions. If the invention is sizable, the capital requirements are greater. A good strategy includes the costs of building the prototype and professionally launching the product.
By default, part of the business strategy is “pioneering”. Pioneering is introducing a new product to the market. Typically, pioneering strategies include trials for the user. In addition yo pioneering, the new venture has one of two strategies to pick. The venture inventor engages in skimming or penetration. Skimming is for those with shallow pockets. Deep pockets have a choice of skimming or penetration.
In addition yo pioneering, the new venture has one of two strategies to pick. The venture inventor engages in skimming or penetration. Skimming is for those with shallow pockets. Deep pockets have a choice of skimming or penetration. Skimming is fewer sales at the richest markets. Penetration is all out marketing.
Skimming requires precision.
The inventor knows the market segments, has talked to the customers and is precisely targeting the invention to those that need it the most. Lack of capital forces sales in the direction of low hanging fruit. If the fancy version of the invention has a long lead time, the inventor may choose to market to those that need the simpler version (minimum viable product). Skimming comes in shades. Some have next to no money and others have more resources.
Penetration is fine for seasoned manufacturers, deep pockets and finely engineered products. Since most venture inventors do not have the assets, savvy and skills required to perform and execute a penetration strategy, the default strategy is skimming.
To find the right market segment the inventor has to get out of the office, go see customers, call customers on the phone. With rich information and a creative mind, the offering is crafted to match the customers.
Example: One invention, a device that adds gasses to industrial tanks to promote convection sounded great in the office. The customers didn’t agree because the gasses meant that the cover had to open. Open cover and the contents are “tampered”. Tampered products and some not friendly emissions made the sale an up hill proposition. Nimble focus on smaller users with less onerous restrictions made up the difference.
Calls are ok, but physically being there is better. Seeing the body language, the plant, and generally, the environment offers richer information than phone calls.