According to the Wall St Journal in its Aug 27, 2012 edition, Copycat Innovation could be the Best path to Investor Funding
The last thing investors want start-ups to do is stop trying to improve upon what’s out there already.
In order to improve their funding chances, founders describe their start-ups in the early stages as copycat businesses of a well-established business or product, but with a twist, typically around an intended market.
Dan Shapiro, a serial entrepreneur and angel investor says, “I actually worry if start-up founders can’t place themselves in a spectrum of businesses.”
A second example is that, among eight companies Shapiro funded in the past year is Bonanza, a “more beautiful eBay for clothes.” .
The article provides five reminders why we should root for, not criticize, start-ups brave enough to weather crowded waters and name calling, to innovate their way to the top.
- Facebook fortified itself in early years with the influential college student demographic, then beat Myspace ..
- Following 37 Signals’ 2004 launch of Basecamp, an online business collaboration tool, Yammer launched a related “social network for businesses” in 2008, grew massively popular and sold to Microsoft this year for $1.2 billion.
- In 2005, Matt Mullenweg and Matt Little founded WordPress to compete with content management systems like Vignette Moveable Type. There are now about 55 million WordPress sites in the world. .
- Though music recommendation site Pandora had already gained popularity and became a public company, Spotify slowly entreated the support of major music labels before entering the U.S. market in July 2011. By the end of 2011, Spotify had about 33 million registered users.
- Competing against earlier file-sharing start-ups ike YouSendIt and Box, Dropbox made cloud storage very simple and reliable, even on mobile devices. Dropbox raised $250 million and has a reported $4 billion valuation.
Comparing a new start-up in its initial stage to that of a well-established and successful business model enhances its chances of obtaining investor funding. This reduces uncertainty for the investor. Rather than supporting a totally new start-up with no track record and with no established market, copycatting introduces a significant degree of certainty to the investor.
The author, Dr.YKK has trademarked his 7-Step Copycat Innovation System that fast-tracks innovation with minimum risk and using the least money, time, efforts and resources. To get a 8-page report on this subject, please go to www.mindbloom.net or send an email to DrYKK@mindbloom.net