For the last few years I have been trying to create a simple model that allows individuals to assess the commercial viability of business opportunities and innovative ideas – irrespective of where this idea is created (university lab, industrial R&D department, current employer or our bedroom) I think there are three primary drivers that need to be assessed and considered when evaluating new ideas. Here are my thoughts:
Commercial drivers (CD) –
who is going to buy the idea/service/product and how do you get it to market?
Human factors (HF) –
who is going to make it their job to get it out there – and is there a team that can make it happen?
Resource Issues (RI) –
have we got the finance, IT, plant and equipment along within physical resources needed to make it happen?
I score each idea on a 1-10 scale in each area. (I have some more detailed sub questions to each area and I have over simplified the above).
I work on the basis of successful mind to market – creating a sustainable revenue stream is down to CD x HF x RI – top score is 1,000 (10 x 10 x 10). In a very crude way it gives me a feel for whether I want to pursue an idea or not. If any score is zero then its back to the drawing board.
So much emphasis is on CD……however, HF needs to be given the attention it deserves!!
For the past ten years marketing experts and the finance community have stressed the importance and benefit of having an “elevator pitch”. This is the term, originating from the US, used to describe very clearly and concisely your proposition or offering. The elevator pitch is commonly used in selling situations, increasingly it has become one of the key tools entrepreneurs use to raise finance.
The Dragons Den format has dominated investments forums in recent years and it seems to be these events where the elevator pitch has greatest application. Just how effective is this pitching environment? – on TV we have seen many individuals face humiliation in front of millions. Makes great TV (not for me, as I personally can’t stand the programme). These TV styled events have got boring, local entrepreneurs (business angels, devils more like) with ego’s the size of planets, sit there in judgement of nervous individuals struggling to get their message out in three minutes.
Well in my view anyone who can make a financial judgement based on a three-minute elevator pitch must be a genius. The sensible and ethical investors I have come across avoid TV style pitching formats and spend time trying to understand the idea, the proposition, the person, the market, and the numbers. It’s a considered response based on a least a couple of hours of discussion. How many ideas get lost or fail to see the light of day because an individual can’t get their message over within 30 seconds to 3 minutes. Does that make them a bad entrepreneur?
Two serious and successful VC’s I have spoken to (one in the UK and the other from North America) have started to do away with pitching type events – instead they want to get under the skin of the ideas and the people. How refreshing!