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Last Updated: Monday, 21 May 2007, 07:11 GMT 08:11 UK
Life lessons for hi-tech start-ups
By Mark Ward
Technology Correspondent, BBC News website

Chris Shipley, Guidance Group
Chris Shipley: Failure can be a good thing
Silicon Valley is famous for its non-stop buzz and the relentless pace of the hi-tech industries that have their home there.

But even in such a high speed environment Chris Shipley manages to set a pretty punishing pace.

The veteran analyst spends her time meeting start-ups and auditioning them for the influential Demo conferences at which they get a chance to show their 'wares - be they hard or soft.

Every week Ms Shipley meets between five and 10 start-ups and, in the run-up to a Demo show, or its European equivalent Innovate!, the number balloons to about eight a day.

"Those are the busy times," she said.

Shake it up

Given that long term exposure Ms Shipley is almost uniquely placed to judge whether the latest rash of start-ups is going to go the distance or stumble at the first hurdle.

Some of the best Demo candidates, she said, were companies that had come up with a technology that was "disruptive".

By that she means a technology that re-writes the rules in a market segment by making something much easier or cheaper to do.

One example of a company with such a technology might be Zink. The name is an abbreviation of "zero ink" and its founders have come up with a way to impregnate paper with pigments.

This changes the rules in a couple of ways. To begin with almost any gadget can, with a little modification, become a high quality printer.

Also Zink prints can be made as big as paper can - leading the way for potentially huge images.

"Zink is really thought-provoking," said Ms Shipley, "I think they will find a lot of interesting new uses for picture taking - maybe photo-notes that you can capture and share very quickly."

Camera phone, Getty
Soon you could be printing out any snaps you shoot
Suddenly a printer that needs an ink cartridge looks positively antediluvian.

Money mover

The net itself is also a big help for those fledgling hi-tech firms looking to get themselves noticed and established.

"The internet does a couple of things," she told the BBC News website. "It extends ones reach and shifts the economics. Creating a company is much more cost effective potentially than it was five to ten years ago."

"You can get it going in with a couple of friends in your garage with a credit card or second mortgage on your house," she said.

After that the hard work begins, she said, because the venture capital community has learned its lessons from the bubbles of the past in which some made, and many lost, lots of money.

"Whether you can parley that start in to venture funding to grow it is another trick and that's where we are seeing a lot more diligence from the venture community," she said.

"It is a much more cautious VC community than it was 10 years ago," she said.

Ultimately, though, whether a company succeeds or not often has little to with the technology it is touting.

"The fundamentals of business remain the same," she said. On meeting a company she tries to get a sense of whether everyone surrounding the firm has what it takes.

Trading board, AP
Not all start-ups become stock market successes
"I look for whether this team and their backers funding it can help this really cool idea get to market and be real," she said. "I've seen some fantastic ideas that just do not have the experience or ability to come to market to make them successful."

Even if an idea does not make it, then that may not be a disaster, said Ms Shipley.

"From the venture capital standpoint you've learned on someone else's nickel and you have lived through that experience," she said. "As long as there's integrity and character, that trumps past failure."

And, she said, funding firms know that most of the time the companies they back will not hit the big time.

"Of every 10 investments just one will be seriously successful," she said.

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