This article is written by Brian Malika, a Contributor Author at Startup Istanbul.
Ed Roberto is the Vice president for the Middle East and Africa Techstars. TechStars is a venture capital outfit that invests in cutting edge digital technologies.
Well for most venture capitalists it can be tricky to settle on the right model to invest in start-ups. This is because sometimes the market might be in demand for specific product or service solutions that can be only realized by investing in start-ups that operate in specific industries.
On the other hand, the burden for exploring new ideas to social problems that are not urgent still concerns investors not to strictly concentrate their investments in start-ups that solve the current social problems. And hence that is where the question below arises :
‘’How Can Venture Capitalists balance between investing in business ideas that solve problems for our current social problems while at the same time giving meaningful consideration to a start-up that is working on solutions for the unprecedented future problems? ‘’
The truth of the matter is that the start-up ideas that solve current social problems promise a set of calculated profit gains for venture capitalists than those start-ups that are offering solutions to future social problems that are not precedented in the first place.
However, if venture capitalists will go ahead and negate the potential benefits of investing in start-ups that are geared to future social problems that are not known in the first place then there stands a risk such venture capitalists to miss out on possessing the future.
Therefore there needs to be a balance on investment planning by making sure that as much as there is need to live one step at a time by investing in start-up solutions that solve today’s stubborn social problems, equally there should be investment considerations by venture capitalists to imagine the type of start-ups that will be effective in the unprecedented future .
And that s why today I have dedicated this article to offer two expert pieces of advice that showcase how venture capitalists can invest in solutions that solve today’s stubborn social problems as well as tomorrow’s unprecedented market challenges at the same time.
These two strategies should be enforced by venture capitalists during accelerator programs to stay relevant throughout time:
First Strategy: Vertically Focussed Accelerator Programs
This is the type of model that advises venture capitalists to focus on start-up founders that have innovative ideas that specifically solve the current market challenges. This means that the accelerator program will consider applications that promise to offer solutions that can be scaled upon very as soon as an investor shows interest during the pitching and networking sessions. This program could incline that start-up founders might be restricted to work on certain themes.
The vertically focused accelerator programs are meant to ensure that the investors will partner with start-ups in order to stay ahead of the current market trends. However, as the future approaches, there is no guarantee that start-ups that were successful during the vertically focussed program will maintain their success.
Second Strategy : Generic Accelerator Programs
Now the generic accelerator program is a model that venture capitalists would run with a view of exploring business ideas that are committed to unheard, un-imagined or out of the world challenges that could be faced as the world heads into the future .
Therefore the generic accelerator program will accept start-up ideas that are anticipating unseen challenges based on proven scientific data regarding the future.
Venture capitalists that choose to work within the generic accelerator programs should not be concerned with a structured way of returning their investments but rather focus on being relevant in future.
With the ever-changing market trend, its challenging for business to retain their usefulness for even a period of five years. Hence its wise that venture capitalists have to make up ways of surviving over time by not only investing in start-ups that solve the urgent social problems that face humanity but also considering to put money in start-ups that offer solutions to a future that is not here yet.