Although in Italy cannot yet properly speak of a real ecosystem dedicated to startups, many opportunities have opened up in this area in recent years and increasingly interesting investment scenarios are gradually emerging.
Today Alberto Giusti, a business angel with a lot of experience in the world of investments dedicated to startups in the Tech field, presents us with this very interesting topic. Alberto Giusti currently collaborates with Italian and foreign profit companies and non-profit organizations dealing with online business modeling and strategic plans for digital development.
He is one of the founders of the Digital Building Blocks movement for the digital transformation of Italian managers as well as the author of several books on these issues.
How did your experience come about?
I already had a company as a recent graduate, a software house that worked not for customers who worked harder but who had more potential, so I was charged the cost part in cash to pay the costs and the margin part in shares of the assets , then I made a series of exits that went well and from there I changed my life. I understood that if the goal was to create money, the best way was not to get paid more and more for one's time but to create something of value and what is most valuable are certainly companies.
What are the steps that anyone who has a technological idea and wants to give life to a startup must take today?
The first steps to take are to validate the problem, solution, fit, anyone who has an idea often has an idea based on a solution they have thought of, the truth is that we start from a problem to be solved and this area that "only those who have strong expertise on the problem can arrive at a solution".
Normally, if the goal is to solve a given problem, whoever has expertise on that problem is therefore more open-minded to look for the best solution and not the first solution he thought of.
The correct approach for a startup is an experimental validation, thus carrying out tests, not simply doing interviews (i.e. customer discovery) but real experiments on the market to understand that the solution I have in mind actually solves the given problem and it follows sustainability metrics, so it will make sure that investors can intercept the solution and give money for it.
How important is the idea or the team today, what is more important? Is a good idea enough?
It is said that "the idea weighs relatively little" but I prefer to say that the idea is a multiplier of the execution, let me explain, with poor or mediocre execution you don't get a sustainable result even if you multiply it by the value of the idea. If I have a good execution multiplied by a good value of the idea, I create the value, the theme is therefore the execution and the execution is done by the team, the team must be complete. Among the team members there must be people who cover the aspects necessary to execute the idea because they must necessarily take care of it at the beginning. The frequency of the experiments can only be obtained if the execution is internalized. Also due to the fact that the frequency of the experiments should be weekly (at least one test per week) for at least 12 weeks which leads to sufficiently probing the problem-solution-fit domain.
A full team with 12 experiments, 3 months, working assiduously on it, will get a high enough proficiency every week to figure out if that solution is the one to move forward with.
Why do many startups fail to take off? What are the potential mistakes to avoid?
Because they are looking a solution for a problem. There is someone who had an idea but does not respond to a problem.
If they had experimented, they would have had adequate feedback within 12 weeks to find the correct solution to the problem, usually a startup finds an ideal solution in 14 times.
What suggestions would you like to give to those who want to develop an idea?
Study, there is a lot of literature on the subject, it is good to look for the basis to avoid making the mistakes that others have made.
What kind of technologies are most in demand by investors?
The approach is what are the right solutions to the right problems, if you simply fall in love with technologies you start looking for a solution without focusing on the problems. 46% of startups die because they are a solution looking for a problem. So you need to intercept someone who has a strong understanding of the problem "at least 5 years" to arrive at having hypothesized a solution and have a scientific approach to validation.
With the scientific approach, sooner or later we find the right solution.
And what space does cyber security have in the world of angel investors?
The panorama is "the problem exists but there is no clear awareness of the problem" and therefore there are few players who buy solutions, normally they are those who have run into the problem due to force majeure, so it is a market that still has a lot of potential unspoken. However, the extent of the problems generates many expectations and concerns for the future but it is not yet understood in the retail or b2c world. The world of cyber security will certainly evolve as the extent of the problems that lack of security generates is high.
For example, when we talk about IoT, problems arise in the field of security even if there is not yet real awareness. There are still few validated business models in this area, also because there are still cultural barriers that mean that the evolution of solutions in these areas are not yet understood and accepted, often by the same people involved in the business and not just the customers .
What will be the future of Italian tech startups?
There will certainly be prosperity by virtue of the fact that an ecosystem does not yet exist, Italian startups are potentially hunting ground for investors looking for "diamonds" that others have not noticed. The venture world is interested in intercepting startups in countries that are not consolidated with the ecosystem and where different opportunities can be seized compared to other markets because knowledge is distributed differently, there are startuppers perhaps locked in cellars who then, when they have validated, go directly into the channels international, this means that if someone in Italy becomes a sort of antenna and intercepts the right solution, there are opportunities.
Italian start-ups potentially have an unexpressed territory of both growth and opportunity, what is still missing is the local ecosystem.
The real opportunity lies in starting from corporates, large companies, which must acquire and invest in start-ups, even if this is still not fully understood in Italy.