Does your idea or company have merit? My name is Rick Gilles, and I’m a strategist, innovator, and mentor for founders, management, and funders in the startup ecosystem.
3 Questions to Answer
In our consultancy, we get requests for services from all over the world in many different kinds of markets for many different kinds of companies, products, and services. As part of our initial review and discovery process, we create a situation report. Our goal is to determine if an opportunity has merit.
When we explore a new opportunity, we want to know three things: 1) Does the prospective client do what they think they are doing? 2) What is the product or service, and is there a real market where real customers will pay for the product or service? 3) Is the business model scalable and will investors want to invest in management?
Analyze the Marketplace
So, can we concisely list the characteristics of the company and the product or the service? What is the product or service and is there a market where real customers will come and buy it? Here we want to understand the type of market, its largesse, what its value is, and how competitive the marketplace or commoditized the marketplace is. Even if you have a good business idea and there is a market, is this one where you and the investor can both succeed? Is there any hint of evidence that an ideal customer exists who will actually pay for the product or service? We really want to understand that you’ve done your homework.
We’ve seen a lot of companies—large companies who want to bring their new products into North America—that actually haven’t really thought through who’s going to buy it, how it’s going to get to the market, or what the barriers are to getting it to the market.
Is It Scalable?
The next question we have is “How do you expect to sell your offering?” Investors want to know whether the business model is scalable. You might have a great technology, but have you thought about how are you actually going to make money selling it? We need to know that. You might see a huge potential for market growth or you might be a small service business in a local market with a very tame potential for growth. Investors are going to be looking for the potential for high growth rate and an exit at a high multiple. They want a return for their investment and they want to get up as high as possible.
So the next question is “Is management capable?” Here we’re really trying to understand if you have the capacity to grow a company or not. And if you don’t have the capacity to manage your company but you have a great technology, that doesn’t mean that you can’t get to market or you can’t get investment. You might even have the best small business idea. We just need to understand what you are capable of doing and what augmentations you’ll need in order to succeed.
The question on resources is really about whether or not you have the capacity to put together this organization and grow a company. What are you going to need in order to successfully do that? You may not have the experience to convert your idea or your technology into a product in the marketplace. Commercialization requires a group of people that know how to do that. You might not have the management skills to run a whole company, so we bring in management.
Where We Come In
Once we answer these questions, we look at the notes that we’ve taken when we meet with you to begin with. The goal here is to do a reality check on your intentions and to test the merits of the project before investing time and money. By creating a situation report, we’re forcing you to think through whether or not you really have something, and it’s forcing us to think through whether or not we can be successful helping you be successful.