Product Champion(s) – The quality of the founder is by far the key deciding factor on the likelihood of success of the proposed venture. 10 traits all successful entrepreneurs share are: abundant determination, not afraid to take risks, high level of confidence, craves learning, understands failure is part of the game, passionate about their business, highly adaptable, good understanding of money management, expert at networking, and ability to sell and promote.
Strength of Team
- Entrepreneurs need innovative product/service ideas to start a company. But to have a successful business they need a strong team. Sophisticated investors evaluate startup proposals in exactly the same way, by the quality, depth and breadth of the startup's team.
Value of Proposed Product/Service – This is measured in terms of innovation, differentiation and benefits. An innovative product/service is a solution to a problem that is unique and has not been done before. Differentiation is measured by how different the proposed solution/service is to what is already out there. Benefits can come in different forms. Financial benefit is typically defined by return on investment, i.e. the payback period. Functional benefits are based on a product attribute that provides the customer with functional utility. Self-expressive benefits provide an opportunity for someone to communicate his or her self-image. Emotional benefits provide customers with a positive feeling when they purchase or use a particular brand.
Understanding of Customer(s) –Who are the entrepreneur’s customers? What do their customers care about? Have they put themselves in the shoes of their customers? Do they have the ability to anticipate their customers’ needs? To avoid being surprised later, entrepreneurs should be cautious about overweighting concepts that fit their own offerings and discounting ideas or concerns that are not in alignment. Market research, involving direct contact with customers, can dramatically decrease development time and cost by “getting it right” the first time.
Market Opportunity – How big is the addressable market? How big is the available market? What are the barriers to market entry?
Competitive Analysis - Identification of competitors and evaluation of their strategies to determine their strengths and weaknesses relative to those of the entrepreneur’s product or service. If you have competition, be certain that you have a compelling value proposition. Entrepreneurs try to know their competition as well as themselves. If your value proposition relies on being first-to-market, make sure that is the case.
Feasibility of Product/Service – Factors governing product feasibility include: technology barriers, volume, complexity of product, manufacturability, price point, product gross margin, market timing, and distribution method.
Probability of Success – This is an overall assessment. It encompasses all the factors above plus growth strategy, level of investment, funding strategy, money management, work ethics, leadership quality etc. The ultimate question judges will ask themselves is “Will I invest in this startup?”