Venture Evaluation Matrix 
Need (Demand)
What exactly is the customer need?
Solution (Supply)
Team
Market
Competition
Network: Networks help them not only to access critical resources, but also to obtain information to de-risk the venture
Sales
Production: Pricing is also affected by the level of competition, discounting practices, and the company’s ability to differentiate itself
Organization
How strong is the need, and how well do customer recognized it?
How much is the customer able and willing to pay?
Know your product!
How does the proposed solution compare to the alternatives ?
To what extend can the innovation be protected?
Do the founders have the required skills and experience?
Do the founders have sufficient motivation and commitment?
Is the founder team complementary and cohesive?
How big is the opportunity?
How large is the target market?
Size of the target market
Know your competitors
What is the nature of competition ?
How can the venture differentiate itself?
What is the reputation of the founder team?
What networks does the team have access to ?
How does the team forge and maintain new relationships?
How does the venture reach its customers?
What is the distribution strategy?
What are the revenue model and pricing strategies?
How will the founder team expand and evolve?
What is the development strategy?
What is the scope of activities, and what partnerships are necessary?
How efficient are operation ?
What is the governance strcuture?
What is the talent strategy?
Understanding the need is related to identifying the initial target customer
The initially hypothesized customer has a different need, or that
the need is there but concerns a different type of customer
Prevent the risk of “forcing” a solution to an alleged need before verifying the real need in the first place.
How strong?
B2C (individuals): consumer psychology matters.
Ex: Medical or agricultural innovations appeal to our physiological needs, whereas social media respond to a human need for belonging and esteem.
B2B (organizations): they have different considerations
Corporations seek profits and efficiency, so the entrepreneur needs to generate a return on investment for the corporation or satisfies other corporate goals
Individuals or organization both have a hierarchy of needs
How well?
Individuals may lack self-awareness, and organizations often
display resistance to new product adoption
Learning from early adopters, iterative exploration
Ability to pay is an economic question about disposable income for individual customers and about availability of budgets for corporate customers.
Until actual money is committed, true customer willingness
remains uncertain
Does the proposed solution solve the customer's need?
Technological entrepreneurs often get carried away with the challenge of the innovation but fail to ask hard questions
about how useful it actually is to users.
Standing out requires that the innovation is clearly better than its alternatives in some important dimension, and it shouldn’t be clearly inferior in other dimensions
Intellectual property (IP) rights: such as patents, trademarks, copyrights, or industrial designs
Strategic barriers to imitation, such as lead time or trade secrets.
Role of product experimentation
How entrepreneurs come up with the right solutions that actually solve real customer needs
Depends on how strong the IP is, and on the nature of the technological advance and on the way the IP is defined
Prior entrepreneurial experience
Industry experience
Experience in key functional areas: marketing, sales, operations
Financially motivated may not be enough
“intrinsic motivation” (enthusiasm for the underlying activity and the entrepreneurial process itself) assures investors that the entrepreneurs will not give up in the face of inevitable disappointments and setbacks
Good to have healthy level of conflict, excessive conflict can ruin even the most promising venture.
Solo founder:
(+) good leadership and is willing to listen
(-) too control-oriented, unwilling to share decision making with others
Founding tem:
(+)
having diversity in term of skills, bot hard and soft
share a common vision and a common passion for the venture
(-) conflicts
an early-stage venture may require more creative types
a later-stage venture may require more execution-oriented managers
Size of the overall market
Transformative vs incremental innovation
Product life-cycle: S-curve
How fast will the target market growth?
How will adoption take place?
Who are the current and future competitors?
Cooperation vs Competition
Nature of barriers to entry and product longevity
indicate the economic importance of the industry
indicating the portion of the overall market
the company actually targets
distinguish different sets of customers. This analysis forces them to be specific about the relevant subset of customers
Entrepreneurs often
focus on changing markets where there is innovation and growth
Timing the market is a key challenge for entrepreneurs. If they enter too late, others will already have seized the opportunity, but if they enter too early, they will fail to get traction
the entrepreneur searches
for potential customers that are particularly eager
In addition to having a clear need,
those early adopters have a willingness to take a risk on an unproven solution
distinguishing customers by their behavioral characteristic
other start-ups
established corporations
they also tend to be inert, focused on selling their current product,
and preoccupied with servicing their existing customers
wait for entrepreneurs to prove the viability of new ideas. Either they enter the market and build up their own presence, or they acquire one
of the start-ups already in the market
The degree of competition depends on many factors, including
barriers to entry, the extent of differentiation, or the scrutiny of regulators
In the earlier stages of an industry, nonprice competition often focuses on technology, customer segmentation, setting a dominant design, and product differentiation
In the beginning, start-ups often differentiate themselves through continuous experimentation and learning, rapid adoption of new ideas, and faster execution.
Over time, the company finds a stronger
identity in terms of its products and market niches
key role in building a new business, as they affect access to information and industry resources. Investors therefore check to find out whether
the founders are well considered within their industry
mapping the network provides information about how connected the founders are in the
broader environment
focuses on the customer acquisition strategy
This concerns the company’s approach to enter the market, not only in terms physical access, but also in terms of customer attention
whether to sell directly or indirectly through third parties
Third parties
selling directly
Relying on third parties leverages the resources and reputation of established players
higher variable costs due to commissions.
selling direct allows the company to better control the customer experience and to learn fromdirect customer contact
often requires higher initial fixed costs
involve cooperation with established firms in the industry
depends to a large extent on the customers’ willingness to pay—in economic parlance, the elasticity of demand.
Pricing is also affected by the level of competition,
discounting practices, and the company’s ability to differentiate itself
Transformative vs incremental products
Nature resistance to adopt - adopt costs
relates to the pre-production stage where
the company is developing its technology and product offering
Investors therefore often focus on identifying
the next milestones and what the company needs to achieve in the short term
What the company plans to do itself versus outsourcing or co-developing with strategic partners.
Some of these decisions are also driven by resource constraints
identify all the resources that are required for production,
including physical assets, staffing, IP, and a variety of other inputs.
outline the cost model, which explains how much it costs to develop and produce the product or service.
concerns the way the entrepreneurs approach leadership.
what is missing in the current founder team
how to make the best use of
the talent within the current team
This means looking at the future strategic needs and at where
the holes are in the current team
Organizations have both formal and informal decision-making structures
The board of directors plays a central part in the formal structure, as it
approves all key strategic and financial decisions.
how the company plans to attract, nurture, and retain
talent
As the company grows, there also has to be a balance between external hires and internal promotions
Developing a cultural imprint
This concerns the set of beliefs about the behavior of others inside the organization that develop collectively as the company grows
Corporate culture defines how employees and senior managers communicate, what values matter within the organization, and how it will respond to external and internal pressures