Paying customers are the real angels

There are many challenges for a start-up to survive its first years and develop into a new regional employer. Whether it is in Sweden, Denmark, or outside the Øresund Region these early endeavors are very much the same. Completing the product, building a strong team with an attitude to grow, or understanding a market full of real customers. Or the funding of the whole take-off operation for that matter.

For many entrepreneurs, however, the biggest challenge is getting to send a first invoice. Sales is naturally seen as a vital part of a company’s operation, and quite often also as an important milestone in the well-written business plan. The final proof that the product, team, and forecasts were correctly assumed and devised.

In surprisingly few cases paying customers are seen as investors and part of funding the early stages of the company. This is sad for three main reasons. First, the entrepreneur gets better at pitching to investors than to real customers. Secondly, investors seldom share the start-up’s interest in the product like the customer does. And thirdly, business angels and venture capital are quite a lot less interested in start-ups who don’t have paying customers. So there is little reason to regard paying customers as anything less than the supreme form of early investors.

There are of course a few minor problems with customer funding in early stages. One is that there is seemingly nothing to sell in the beginning. Another, that there is little or no time to sell (or build a sales organization for that matter) when most of the efforts are focused on getting the product ready for launch.

There is however, one thing that addresses these concerns. Experiences from working with concepts for creating new business, like Mobile Heights Business Center and Minc/On, all point in the same direction. When you focus your business and sales on real and well-defined needs, paying customers suddenly become a very realistic funding option. Especially when you go the extra mile and find out what the need worth solving is. An example: Instead of just a general need for shorter development lead-times, it could be enhanced as a need for faster prototype testing. And a 20% reduction of testing costs estimated to be worth 200k EUR per year. For an entrepreneur this kind of quantified need means more powerful opportunities.

Teknopol is, together with Innovationsbron, exploring new methods to do this in a systematic way. Connecting established businesses’ needs with start-ups’ solutions. The project is not primarily focused on coming up with new products or services. Instead it is providing entrepreneurs with opportunities to apply and tweak their existing skills and technologies to fit real needs. Thereby systematically increasing the possibilities for start-ups to deliver early and send that first invoice.

The methods are developed as we go. By continuously harvesting needs from large companies and presenting them to start-ups, we learn and iterate. So far the most interesting potential has turned out to appear between companies in different industries. We hope to see the same powerful opportunities across borders, including initial contacts with companies in Copenhagen and London.

So if you want, you may read this column as a call for needs from companies in the Øresund Region that have answers to the following questions: What problems or needs do you want to address within the next 6-12 months? And for each of those needs, what would it be worth to you if there was a good enough solution within commuter distance?

If you help us get in touch with you, we will help you find and address your quantified needs. And help grow the Øresund Region in the process.

Jonas Klevhag

Business Advisor, IT & Digital Media

Teknopol