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Screening Venture Opportunities

Screening Venture Opportunities. Dragon’s Den. What are the factors the Dragons are looking for? What do they bring to the table other than money? Are the entrepreneurs being ripped off? Shark Tank Equity Moment. Superior Businesses…. IDEA -> OPPORTUNITY

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Screening Venture Opportunities

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  1. Screening Venture Opportunities

  2. Dragon’s Den What are the factors the Dragons are looking for? What do they bring to the table other than money? Are the entrepreneurs being ripped off? Shark Tank Equity Moment

  3. Superior Businesses… • IDEA -> OPPORTUNITY • Create or add significant value to a customer or end user • Solve a significant problem, or meet a significant want or need, for which someone is willing to pay a premium • Have robust market, margin, and moneymaking characteristics • Have a strong management team that can quickly exploit the opportunity • …work!

  4. Screening Methodologies • QuickScreen • Provides a broad overview of an idea’s potential • Enables the entrepreneur to conduct a preliminary review and evaluation of an idea in a short period of time • Venture Opportunity Screening Exercises (VOSE) • Segments the screening of ideas into extremely detailed but manageable pieces • I have mixed feelings • Are these are best screening instruments available • Is it possible to know all the answers to these questions so early?

  5. Adams On Customers • Before you build it, validate the market • Don’t have a solution looking for a problem • The ready-fire-aim approach • Common illusion – I know my customers • Limited feedback and personal experience generate the illusion • Why validate? • Get the product right the first time • A beta community emerges • You generate a ready-made contact list of first customers • You can more easily raise smart investment capital • You use capital more efficiently • You clarify your competition

  6. Market Validation • You cannot sell to everybody • A target market is a limited, discrete subset of companies or individuals whose pain is so great without the product that they will readily buy it • Your solution should be a “must-have” for your targets • Pyramid of influence • Stage 0: Secondary research • Stage 1: Primary market research • Stage 2: Quality influencers (see book) • Stage 3: Leverage influencers (see book)

  7. Stage 0-1 • Secondary research • Market size, trends, growth • Research competitors, customers • Read the industry press & specialized reports • Remember that secondary research is not validation • Primary research • Who needs the product most? • Who has the worst pain? • What does this market look like? • Test at least 3 hypotheses with data • Be prepared to revise hypotheses and start again • Interview at least 100 customers • Understand the customers and develop a sense of their pain • Make it everyone’s job to interview – even engineers! • Get a professional firm to develop questions and analyze data • Eliminate temptation to lead customers or offer solutions

  8. Eastwind Case Is this an attractive opportunity? Practice using my quick screen form

  9. Class Exercise In groups of three: Pitch your idea to your two group members in five minutes Rate the pitch using the quick screen form Ask questions if necessary Share your analysis with the proposer At the end, share your scores with the class You have 30 minutes The highest scores at the end of the evening will present to the class.

  10. Additional questions What good news or information will arrive (or can you cause to arrive) that will enhance your opportunity? What can you do or learn to make you the most knowledgeable competitor in this industry? How much room for error is in your strategy? Does your venture opportunity have any fatal flaws? Faulty assumptions, major risks?

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