Big Data

VCs to data startups: Your fancy tool is not a product, it’s just nerdy

Image Credit: Michael O'Donnell/VentureBeat
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SAN FRANCISCO — A statistical model is not a product — yet.

Data nerds might be incredibly good at creating fancy data models and tools, but if they want to take those skills and create a company, they need to make sure they build an actual product that actual people want to use, says Scott Raney, a partner at Redpoint Ventures.

“This isn’t about building a science project, it’s about building something that solves a business problem,” Raney said during a panel discussion at our DataBeat conference yesterday.

Raney, along with XSeed Capital’s Robert Siegel, Accel Partners’ Jake Flomenberg, and Data Collective’s Matt Ocko, discussed what it takes for a big data company (or entrepreneur) to capture their attention and investment, and also to make a real dent into the market.

The consensus: Even big data companies need to take a look at the market, realize they’re not alone, focus on shrinking their weaknesses, and create something that truly helps someone.

This is something we often hear in the context of consumer products: Do people really need yet another photo-sharing app or Uber-for-a-random-item?

Hint: no.

So this is an important moment for big data startups. You may have built some fancy data modeling tool, but why should any one of these venture capitalists give you their precious money? What problem are you solving and for what future customers?

You are just as much of a dime-a-dozen startup as the photo-sharing app if you can’t answer these basic questions.

More about the companies and people from this article:

Founded in 1983, Accel Partners has a long history of partnering with outstanding entrepreneurs and management teams to build world-class businesses. Accel today invests globally using dedicated teams and market-specific strategies for... read more »

Data Collective is a venture fund with a unique team of experienced venture capitalists, technology entrepreneurs and practicing engineers, investing together in seed and early stage Big Data and IT infrastructure companies. Data C... read more »

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Ameera Ahmed
Ameera Ahmed

To data startups - forget the VCs. Build a client list first, VCs do not know much about the data needs of large companies. You only need one client to take a risk on you.


@adamsfallen "but can I still make millions off my fancy idea without ever taking to market & scaling? puh-lease?"

Brad Seraphin
Brad Seraphin

@VentureBeat, Go Big or Go Home. If you're going to launch nukes... at least name some names of the non-product fancy data modeling tools.

Sumi Allen
Sumi Allen

Major Tom to VC's, you need to lobby away the red tape and start getting companies to IPO instead of acquired by nepotistic connections from Yahoo, Google and Apple.

Matt Slatner
Matt Slatner

So true! Not ours! Shameless plug! ;)