Startups require three important ingredients – a great idea, the willpower to see the idea from concept to execution, and of course, funds. In my experience willpower and funding are the rarest ingredients and lack of one or both is the root-cause behind startup failure. The good news is that there are many funding options when it comes to creating a company, and I’ve often been asked for funding advice from colleagues who are thinking about undertaking the startup journey like we did here at Mersive.
One piece of advice I’d give is to think hard about the impact of a particular funding source on your company in the long-term. I firmly believe that company culture (one of the things that will define organizational success in the long term) is partly defined by your sources of funding. What about its founders? Its location? Its customers? Of course, those all play an important role, but funding is about getting rocket fuel for your ideas. The type of rocket fuel you put into your company will help define how it operates. As we emerge from the startup phase into our growth stage – who we are as a company was definitely influenced by our funding story.
So, let’s look at Mersive’s sources of funding. I started the company out of academic research – our product emerged from a series of research programs at the University of Kentucky. An early call to action can be found here. We then spent years advancing computer vision and tracking, artificial intelligence and augmented reality – all to support human-to-human collaboration and human-to-computer interaction. After realizing that what we were doing supplanted AV hardware, we founded the company on the principle that intelligent software (and not hardware) could revolutionize the AV market. If I think about our 8-year funding story, it took place in a series of chapters (called “series events” by the venture capital community). Each capture added to our company culture and personality. Here’s a description of each funding source and how I think it defined our culture:
Traditional Venture Capital (Series A, B)
Cultural Result = The Shot Clock Mentality
Our first funding came from a group of investors in the Midwest who were, like all venture capitalists, a healthy mix of risk-taking entrepreneurs and socially conscious investors. Their mandate was to help establish new economies in the Midwest and Appalachian region by funding early-stage innovators. Of course, their mandate also included making money for their partners. If you’re thinking about taking on venture capital investment – keep in mind one universal aspect of venture funds is that they all have a time limit. Today, I refer to this as the “shot clock”. The shot clock defined how long you’re allowed to “get it right” and become successful. Because you’re breaking new ground – you’ll never get it completely right the first time, but you can iterate, test, build, and test again. Because everyone in these days had one eye on the shot clock – we learned a deep sense of urgency. The shot clock mentality means that we still focus on creative iteration, engagement with customers, and speed to market every day. I don’t think we’d be the same company we are today if we hadn’t gone through this phase of development.
National Science Foundation, SBIR Program
Cultural Result = Intellectual Honesty
Once we started to build Solstice, it became clear that wireless sharing would play a big role in how we think about both our educational and workplace environments. We wrote a proposal to the National Science Foundation that outlined the opportunity, and how it would transform the way we work together for the better. They agreed and funded the core development of the video streaming and control algorithms that power Solstice today. The National Science Foundation Small Business Initiative Research(SBIR) program looks to fund the emergence of new technologies into the commercial sector. Think of the program as a bridge between academic research and science and products. It’s a fantastic program and, ultimately, can pay for itself through job creation when a company becomes successful.
This era focused us on thinking rigorously about how we develop products and, maybe more importantly, how we measure our progress. I probably complained plenty about the paperwork, Gantt charts, and academic, peer-reviewed progress reports that we had to generate as part of this funding program – but in hindsight, they set a standard that we adopted as part of our culture today.
The scientific approach we inherited from this phase means we can be self-critical and analytical without clouding our thinking based on known bias. Some of our best innovations have emerged by challenging the assumptions of the market (i.e. Annotation should look like a chalkboard) or even challenging ourselves. We have the National Science Foundation to thank for this part of our culture, and it allows us to be honest with one another without conflict.
US Intelligence Community and 3M (Series C)
Cultural Result = The Customer Deserves Our Best
The first customers for Solstice were In-Q-Tel, the venture capital group of the US Intelligence Community, and 3M. They invested in the company to help productize the work that got started with the NSF. I spent countless hours meeting with three-letter agency customers who saw the need to freely share content from any device during meetings. Even prior to the launch of Solstice to the broader market, we were supporting customers in the White House, the Intelligence community, and within product research groups at 3M. Believe me, if these are your customers, you quickly learn that your customer is professional, smart, and deserves your best – no matter what.
This is so ingrained in our culture that we don’t suffer from other issues that can arise in successful technology companies (i.e. “we know best” or “it must be the customer’s fault”). Our focus on enterprise stability and security, a deep understanding of what the customer needs in mission-critical environments – come from our final phase of funding.
I think the point is that as you look at defining what rocket fuel to take on – it’s important to think about how it will impact the company in the long-run. Not all funding is created equal, and culture is something that you need to contemplate as your company grows from startup to success. Your early years will define what the company finds important when it scales.