The Science of Spotting Good Business Ideas
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Transcript of The Science of Spotting Good Business Ideas
A summary of Business Angel Decision Making By Andrew Maxwell, a PhD
Thesis.
11 2 3 4
8765
Market Potential
Product Adoption
Protectablity Business Experience
ProductStatus
Route to Market
Customer Engagement
Financial Projections
What are the key elements of a good business opportunity?
Research on 5 of Canada's top angel investors showed they looked for the following 8 elements
Is there a large market for this product or service?
A Large market potential (i.e. over $20 million)
B Medium market potential (i.e. over $5 million)
C Unable to predict – likely less than $5 million
1 Market potential
Will customers in target market easily adopt this
product?
A Customers will easily adopt product or service
B Benefits harder to identify, some adoption issues
C No clear benefits, or major adoption issues
2 Product adoption
How easy will it be for other people to copy the product
or service?
A Product patented or significant other barrier
B It will not be easy to replicate
C Anyone could copy it
3 Protectablity
Does management have direct and relevant
experience?
A Significant relevant experience
B Limited experience
C No evidence of required experience
4 Business experience
Product ready for market, or major work
required before it ships?
A Finished product
B Design complete all technical issues addressed
C Needs more research and development
5 Product status
Is there a realistic market plan and route to
market?
A Realistic marketing plan / distribution partner
B Options identified – no agreements in place
C Limited thought given to distribution issues
6 Route to market
Is the first customer identified? Does the
product meet a need?
A Customer in place, or committed to purchasing
B Customers engaged in development project
C No first customers identified
7 Customer engagement
Profitable and sustainable cashflow?
A Sound business model and cash management
B Unclear profitability and cash management
C No evidence of profitability and cash management
8 Financial projections
For more on the science of innovation visit:
www.startupcherry.com
www.startupcherry.blogspot.com