Incentive, Peregrine's Incubator is one of Israel’s leading early-stage investors. Incentive has a particular interest in enterprise software startups. Although software companies in what is often referred to as the TIME market (Telecom, Internet, Media and Entertainment) typically address large and potentially viral consumer markets, Incentive’s experience is that it is much easier to validate a venture’s potential in the B2B-focused enterprise software market. Incentive believes that carefully selected enterprise software companies enhance the risk/opportunity profile as well as the ROI of its portfolio and actively seeks investment opportunities in that area.
If you are an entrepreneur seeking seed investment for your enterprise software company, here are a few tips from Incentive on how to position your venture for success.
Measurable market traction
A proven track record in closing an agreement and working effectively with a customer is an important indicator to an investor regarding both your product and your team. Even an unpaid but well-defined pilot with a company that matches your target customer profile is a positive sign that your product-under-development meets a real market need¾and that your team can deliver.
Barrier to market entry
The fact that an Israeli company is far from its target markets weakens its competitive edge. This inherent weakness must be counterbalanced by a strong technological edge that raises a meaningful barrier to market entry. You must convey to investors that your company’s intellectual property¾whether formally patented and/or specialized know-how¾provides you with a significant competitive advantage that cannot be easily imitated by your competitors.
Although the enterprise software market is not typically measured in the billions of dollars, a properly positioned enterprise software product ought to be able to address a market in the hundreds of millions of dollars. Do your homework carefully and show the investor that your product can achieve significant revenues in a reasonable time frame.
As with any venture, it is all about the people and you must ensure that the business team you are presenting to the investor has credible experience and connections in your target market. It is incumbent on you to show that each team member and each business partner brings quantifiable value to the venture.