Software Product Development for Core sectors

You have a startup idea, good.
You make a revolutionary product on your idea, excellent.
Your competitors are some big companies trying to fit in their existing product to fix the exact problem that your product solves, not good.
You are pitched against these big companies in your first ever big deal with a big client, very bad.

Why bad? As a startup, more often than not the sustainability depends on cracking this first mega deal, while any large company would look at the sustainability of the software provider through the life-cycle of the product which is typically 3-5 years. So if the startup is pitched against one of the established player, inspite of having the better product it looses out on the point of sustainability in the final round of selection. This has been a story of many a startups.

The option of angel investor could help in showing sustainability, but then the funds from angel investors are most times not enough to sustain for that long. Also, showing support of angel investor may be taken as indication towards a yet-to-mature company, hence acting contrary to the expected help.

So whats the solution?

The solution is to sell your product before writing it. Let me explain. If the product solves a problem for a particular industry or domain, then you can contact any small or medium sized company in the domain and sell the product to them and build it as per their specifications. But the product must be designed to be fully customizable for the domain. Once the product is ready and live then selling it becomes a different ball game altogether. The best case would be when you can market the product along with your first client as it gives the sustainability. Likely the company, being a core sector company, won't have a software division capable of maintaining the product so as the software provider all future maintenance would keep earning you the revenue. The future revenues from the product can be shared with the client while keeping full revenue from customizing and maintenance for future client.

This is a win-win situation for both the startup as well as forward looking core sector company. The company gets an alternate source of revenue while the startup gets a kind of parent to nurture and support it. The deal can be made such that the product is initially designed as a custom made software at a discounted rate (to account for extra effort required in implementing a customizable design).

Once you have good product idea, all you need is some good salesman skill, a company looking to diversify to get a successful startup.

Best of luck!!