Want to create impact from your research via a start-up? Start with a problem, not a solution.

By Sam Harley, Natasha Rawlings and Peter Devine.

A shared motivation by many passionate academic researchers is to create a positive impact on society and the planet. One way researchers can create impact is to translate their research into innovative products or services via a start-up company. A start-up company can be created without the need for the researcher to run the company themselves and leave their academic position. To get these companies off the ground, typically “seed” investment (the first funding for a company) is obtained from high net worth investors (angels) and early-stage funds like Uniseed.

However, after years (if not decades) of tireless research, many passionate researchers may pitch their start-up ideas to investors only to be told “I’m sorry, we’re not interested”.

But why?

There are a number of reasons why an investor may not want to invest in a particular start-up. One of the most common reasons is that the product or service being offered does not address an unmet need in the market.

In other words, they are solutions looking for problems.

Why is addressing a problem essential?

Customers buy products and services because they solve a painful problem. If you solve a customer’s problem, you will create value for them. If a product or service does not provide value, then customers will not buy it. Given that investors are interested in gaining a return on their investment by selling the business at some point, they are unwilling to provide capital to start-ups with products or services a significant number of customers will not buy.

The number one reason why start-ups fail is because they don’t address a market need (1).

It can be disappointing to hear that an investor is not interested in supporting the idea you have dedicated years to. Sometimes companies that investors turn down go on to be a great success. For example, 7 VC funds turned down AirBnB’s seed round. Had they made the $150k investment, this would be worth $2.55 billion today (2)!

So, who decides whether a product or service is a true innovation? The customer does. Not you, not the investor.

It doesn’t matter how amazing you or an investor think a start-up is or how hard you try to push the idea to customers. If the customer doesn’t want the product or service being offered, the start-up will not succeed. This is why it is essential to find out what the customer really wants, that is, what are their unmet needs and problems?

At Uniseed, we have a proud history of supporting researchers and the start-ups born from their research through investment. If you are a researcher interested in creating impact through a start-up, here are two strategies we think can help you avoid this common mistake.

(1) Be problem focused from the beginning

When designing a research project, start with the problem and work backwards. It is crucial to test your assumptions and validate the problem actually exists. The best way to do this is by speaking to people who you think might have a problem you can solve. These people will be your start-ups potential customers in the future. Ask them, “What are your biggest problems?”. Ask ‘‘Why’’ a lot to really understand the problem they are defining for you. Then design the research project with the objective of creating a solution to this problem, if not, getting closer to a solution. Research whether similar solutions already exist. If they do, why would your solution be better? Is it cheaper to manufacture or does it save time?

For example, if you are a biomedical researcher, go and speak to a clinician at a hospital to find out what diseases currently lack adequate therapeutics. Understand what, if any, therapies are currently available and why they are inadequate. Talk to patients who suffer from that disease about their experience and what issues they have with the available therapies.

(2) Find a problem for your solution

If you are already undertaking or have completed a research project but haven’t thought about the problem and unmet need, fear not, your research is not wasted. You just need to find a problem for your solution. Think about where your solution may be useful. Again, talk to potential customers-people like to talk about their problems. You may have a solution for a problem you didn’t even know existed. Alternatively, tweak your solution a little to meet the customers’ needs.

By focusing on solving a problem you will have a far greater chance of securing investment for a research-based start-up and ultimately creating impact from your research.

If you are a researcher at one of our research partners (Universities of Sydney, NSW, Melbourne and Queensland or CSIRO) and are interested in translating your research into impact through start-ups, visit our website to contact us directly.