In our ongoing series on business tropes, and how companies can best communicate their equity story to potential investors, we’re looking at the new ‘new thing’ for the fifth installment. The founders of this type of business are known for deviating from their original idea. Where once they had a ‘new thing’, they now have a new ‘new thing’ and may have abandoned their initial concept without fully exploring its potential.
The new ‘new thing’ typically has a management team that lacks focus on making its first idea successful and is less sales oriented. This trope is usually founder-led, with the founder often being an innovator; more interested in creating new products or services, than building a large business.
Chipidea
Portuguese company, Chipidea, provides a great example of the new ‘new thing’. Formed in 1997, as an analog semiconductor intellectual property (IP) design center, the firm evolved into the world’s leading supplier of analog and mixed-signal IP. The founder, José Epifânio da Franca, wanted to diversify and also build chips for mobile phones as a fabless design company.
First is sometimes best!
This new ‘new thing’ didn’t take off and it was Chipidea’s first incarnation, providing a library of semiconductor designs that attracted buyers. Following subsequent investments by other investors, Chipidea was sold to MIPS Technologies in 2007 for $147 million and MIPS stock related to future performance.
Market & investor opportunity
There can be positive returns for investors with this trope, but it requires a huge amount of work. If a founder’s ‘new idea’ is developed, it can often mean working not only on the established business but also expending a great deal of additional time and energy on the new ‘new thing’. Running a startup within an existing business is not an endeavor to be taken on lightly.
Companies that fit the new ‘new thing’ bill tend to be in industries with short product lifecycles such as electronics and semiconductors, like Chipidea, where it’s easy to get left behind by next generation products. The competitor landscape is challenging and changeable.
The management team in new ‘new thing’ trope normally go through many rounds of meetings before finding an investor that is prepared to take on their business.
Proceed, with caution!
If your company profile matches the new ‘new thing’, you would be wise to evaluate whether your old product or service really has potential, or not. If it does, investing the necessary time, resources and capital to reach your goals is the way to go. But, if there is little potential we would advise selling the business and starting your new idea as a standalone startup, as this way you will generate much more energy for your new project.
At Vie Carratt, we can assist in assessing whether your existing idea or product has real potential and help you find the best business partners to achieve your ambitions. Please get in touch, if you’d like to know more.