David Croslin says there's a big difference between a cool invention and a money-making innovation.
"It's very critical to draw the line," said the former chief technologist for Hewlett-Packard. "If I can't satisfy needs, I don't have a product that I can make money from."
Croslin, speaking at the Chattanooga Enterprise Center's tech transfer conference, estimated there are millions of startup ventures globally annually, but few get beyond funding by friends and family.
A big reason, said the chief executive of the Innovate the Future consulting firm, are mistakes startup business people make when seeking potential investors.
Croslin, also a former chief product architect at Verizon/MCI, said entrepreneurs ought to bring visibility, credibility, stability, fundability and marketability.
"You've got to pursue these that make you real," he said.
Croslin added that startups have to understand their customers.
"The customer is changing constantly," he said, especially the 13- to 22-year-old age group. "They have no loyalty."
John Chavez, president of the New Mexico Angels investment firm since 2008, told the group of about 300 that money from family and friends can only take a new business so far. He said angel investors are typically next after the family-friends threshold.
"There's a lot activity in that space," said Chavez, adding that estimates are that upward of $26 billion in new capital will be deployed by angel groups this year.
Still, he said, his group is picky. Last year, Chavez's group examined 300 potential deals and funded just three.
"It's a very competitive marketplace," Chavez said, calling angel-investing "truly gut-investing."
Wayne Cropp, who heads the Enterprise Center, said the conference is about creating an "entrepreneurial ecosystem" in the area.
"It's important to create a buzz about opportunities," he said.
At a Venture Forum on Thursday, nine startup companies, including Quickcue and Cumberland Signal Labs in Chattanooga, pitched their ideas to more than 25 investors for initial funding.
Chris Daly, the center's director of technology development and transfer, said the aim is to build a community for entrepreneurship and commercialization.