Business Angel hits out at 'stealth mode'

• Dorricot's view is that in stealth mode, start-ups lose some key advantages, from customer and market information, to helpful feedback and 'reality checks' to even the ability to raise money, all of which are vital for young ventures

• Customers. Without anyone using the product how can an investor be persuaded that the product fills a real need. How can you know that people will buy the product? In other words, with no customers you lose the ability to prove there is a market for your product.
• Feedback. If no one knows about your product nor uses it how will you get ideas for improving it and keep ahead of any competition? You have lost the direction and information the market gives you by being disconnected.
• Money. Any business angel, bank, venture capitalist, or investor that does not sign an NDA will no longer be available as a source of funds. That's a lot of potential money removed from the table.
• Market Knowledge. No friends or professionals will know to tell the entrepreneur if another competitor comes onto the market. Someone is almost certainly doing something similar somewhere else. Not knowing about them means there's no opportunity to learn from their mistakes.
  

On the flip side, he makes the case that if an entrepreneur can evangelise about his product, people will become excited about it. They will tell others. They will buy it. They'll give lots of feedback about potential improvements and new features. This allows the scarce development to targeted at key enhancements. The responsiveness gives this product an edge over the competition. Differentiation becomes easier generating more customers. More revenue. A virtuous circle and incidentally one that may not require investment!

He does acknowledge that in an extreme case 'stealth mode' might be necessary. Dave Tester, co-founder of Air Semiconductor points out that when you start talking about the new venture, you run the risk of waking the giants of the industry. But they will know anyway as the prospective new customers for the venture will also be talking to the industry leaders.

So, given the other simpler propositions out there, most investors won't make additional effort to find out, and 'stealth mode' is more of a hindrance than a help.

Nick Flaherty has been covering technology and startups since 1990 and is based in Bristol, where he co-founded the SiliconSouthWest network. During that time he has worked for most of the electronics magazines and newspapers in the UK and several in Europe and the US, covering all areas of the industry. He blogs at The Embedded blog www.embeddedblog.blogspot.com and  Portable Multimedia www.portablemultimedia.blogspot.com and at www.flaherty.co.uk.