The following is a post written by Andrew Hsu, co-founder and managing partner forSpotlight AR. You can find Andrew on Twitter at @Andrew0Hsu.
No doubt you have a variety of experts and resources that help you stay ahead of the curve. But do you ever wonder who influences your influencers? One answer is research firms, such as Gartner, Forrester Research, International Data Corporation, SiriusDecisions, and Digital Clarity Group.
The individual industry analysts at such firms assess market forces, consumer trends, and up-and-coming innovators. In short, they earn their livings by solving problems and predicting the future. Analysts apply real-world experience and intellectual curiosity to the markets they cover. They also immerse themselves in disruptive technologies and develop relationships with everyone from industry vanguards to startups that could be future Airbnbs, Fitbits or Ubers. Tapping analysts’ expertise will help you assess startups better than ever before.
Why VCs Should Engage With Analysts
By the time an emerging technology crosses your radar, it probably got there with help from an analyst. Consider Forrester’s James McQuivey (who writes about digital disruption and consumer hyperadoption) or Gartner’s Richard Marshall (who covers mobile development technology strategy). These are but two examples among thousands of analysts who pride themselves on discovering innovation and advocating for innovators.
VCs should engage with analysts because:
Analysts possess deep insight into industry trends backed by extensive research and proprietary data.
Analysts can help you understand a given topic or market from several perspectives, including pain points that need to be solved.
Analysts can tell you how fast a market is growing and explain current consumer (for B2C) or buyer (for B2B) readiness for innovation.
Analysts can gauge a market’s vulnerability to disruption.
Analysts publish perspectives on many of the players in a given ecosystem. There are the well-known ranking-style reports like The Forrester Wave and the Gartner Magic Quadrant. And there are many more trusted and popular styles of reports that go well beyond the elite vendors, such as Cool Vendors (Gartner) and the Market Overview (Forrester), for just about any digital segment you can imagine.
How to Successfully Work With Analysts
Understand their coverage areas. An analyst focused on a B2B audience will view a topic from the perspective of a Fortune 500 executive. An analyst who focuses on B2C clients will assess a topic against consumers’ preferences.
Dig deeper. Analysts’ reports represent only a fraction of what they know. Analysts also act as consultants and do custom research that does not become known to the public. They are always learning about new firms and technologies to inform their future research. Assume that their published reports are just a jumping-off point for going deep into a topic or set of firms that interest you.
Tap their expertise. Consider analysts for real-time insights on fast-moving trends. Analysts are like journalists: They need to react to news with meaningful insights for their clients, the news media that want to quote them and their own blogs.
Consider investing. You might know a few analysts already. Perhaps you occasionally compare notes over drinks. There’s no charge to talk to analysts, but to get the most benefit from the collective wisdom of a research firm, you’ll need to buy a subscription. Depending on the nature of the subscription, your investment will give you access to a broader pool of analysts, proprietary data about consumer adoption habits and tickets to their events.
Industry analysts won’t become your sole source of research, but they should be in your mix of expert resources. Cultivating relationships with analysts will enrich your due diligence as you build your portfolio. As you become more familiar with analysts, you will become more fluent in the industries you need to understand and the startups you want to assess. A whole new world of insight awaits.
Featured image courtesy of Wikimedia Commons user Brocken Inaglory.