investment feasibility assessment

7/31/2019 Investment Feasibility Assessment

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Step 4: Work with your coach to address challenging areas.

Your coach will independently complete this assessment based upon his/her perspective on your business. Sheet 5 of this

worksheet combines the results of the company and coach score sheets and compares how each criertia was evaluated. Areas of

agreement and divergence are highlighted, and the company should discusss strategies to address any weak areas and identify

why there is this difference in scoring.

Step 1: Review the Investment Feasibility Assessment Criteria Descriptions.

1. Investment Feasibility Assessment

OutcomeIdentify strengths and weaknesses in your business as compared to a model investment opportunity.

Overview

Instructions

This assessment identifies the major (not all) criteria that an investor will use to evaluate an investment opportunity in your

business. By evaluating your business against these criteria, you can determine your readiness to pursue outside investment. The

criteria can also be used to develop benchmarks for improvement in various aspects of your business.

Review the criteria and descriptions on Sheet 2 of this worksheet. For each criterion, choose the description that most closely

matches your situation. Mark that descriptions number (1 through 5) on the Scoring Page (Sheet 3 and Sheet 4 of this

worksheet). The company and their coach have separate scoring pages.

Step 2: Total Score.

On the Scoring Pages, the points will be automatically totalled for your investment opportunity on the 20 criteria. NOTE: The

model, or perfect, investment opportunity would score a 5 on every criterion, for a total of 100 points.

Step 3: Evaluate your business.

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In a comparison of an investment in your business against the model investment opportunity, no score guarantees an investment.

A score of less than 4 for any individual criterion indicates a weakness in the investment opportunity, which requires further

consideration. Also, pay attention to any area (management, market, technology, traction, business model) where your score was

less than one-half of the possible points overall. The Analyses on Sheets 3a & 4a provide some additional information based on

the scores that the company received for each criterion.
http://www.atdc.org/


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1. Team has limited record of success.

2. One or two team members have significant professional accomplishments.

3. Several members of management have significant professional accomplishments.

4. Several members of management have created wealth for investors.

5. Several members of management have created wealth for investors via a similar business concept.

1. Team can function without executive dining privileges and personal assistants.

2. Entrepreneurial experience limited to internal corporate initiatives.

3. Team has entrepreneurial experience but limited success to date.

4. Several team members have grown a company from zero to over $20M in revenues.

5. Team has grown multiple companies from zero to over $20M in revenues

1. Lots of passion, limited functional or industry experience.

2. Company has identified key hires to provide functional and industry expertise.

3. Team has appropriate functional and industry experience (given its stage).

4. Several members of senior management have significant functional and/or industry experience.

5. All senior team members have significant functional and industry experience.

1. Team is totally new.

2. New team with complementary backgrounds.

3. New team but has worked together, successfully, for several months.

4 CEO has previously worked with one to two key team members.

5. Several members of management have worked together before.

1. Technology-focused team.

2. Key functional leaders in place, no CEO.

3. Key functional leaders and stage-appropriate CEO in place.

4. Exit-ready CEO and key functional leaders in place.

5. Exit ready team in place.

2. Criteria and Descriptions

Team is complete

MANAGEMENT

Transferable record of success

Ability and experience to leverage

scarce resources

Appropriate functional and industry

experience

Worked together previously


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1. $1B annually.

1. 100% annually.

1. Many strong competitors.

2. No competitors known.

3. Competitors known, with moderate weaknesses in Companys defined niche.

4. Competitors known, with significant weaknesses in Companys defined niche.

5. Competitors known and pose limited threat.

1. Customers are conservative and only buy from established players.

2. Customers are historically conservative but open to new players given current market conditions.

3. Several trailblazers exist that will buy from new players to exploit a strategic advantage.

4. Trailblazers exist and majority of remaining customers will adopt upon positive validation of valueproposition.

5. Customers are aggressive and frequently buy from early stage companies.

1. Competitors can enter at will.

2. Market entry possible with modest time and capital investment.

3. Market entry restrict by at least one barrier that requires a significant investment of time and capital to

overcome.4. Market entry restrict by several barriers that require a significant investment of time and capital to

overcome.

5. Market entry is difficult even for committed and well financed competitors.

MARKET

Available market well defined and

large

Market is growing

Competition has identifiable

weaknesses

Customers receptive to early stage

companies

Market entry by new competitors is

difficult


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1. Technology is well-established.

2. Technology is well-established. Company has identified potentially novel applications.

3. Technology is well-established. Company has identified novel applications.

4. Novel technology platform with significant potential.

5. Novel technology platform that is widely-recognized as state of the art.

1. Company has no relationship with the creators of its technology.2. Company has informal access to the creators of its technology.

3. Company has formal access to the creators of its technology.

4. Company uses external personnel and employees to support and expand its technology.

5. Companys technology is supported by internal employees.

1. Technology is applicable to a limited set of applications.

2. With an investment in R&D, technology is applicable to a modest set of applications in several markets.

3. Technology is applicable to a modest set of applications.

4. With an investment in R&D, technology is applicable to a significant set of applications in several markets.

5. Technology is applicable to a significant set of applications in several markets.

1. Company has non-exclusive rights to its technology.

2. Company has exclusive rights to portions of its technology.

3. Company has exclusive rights to its technology subject to certain performance metrics.

4. Company has exclusive rights with the option to own its technology.

5. The Company owns all of its technology.

Technology is broad

Expertise in place to maintain and

expand technology

Company based on unique or

innovative use of technology

TECHNOLOGY

Technology is exclusive to Company


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1. Companys product/service is just a concept.

2. Customer feedback has shaped product/service specifications.

3. Concept has been reduced to a prototype.

4. Customers are using/testing pre-commercial versions of Companys product/service.

5. Product/service is ready to sell.

1. No target customers.2. Target customers know, pain is unknown.

3. Company has identified target customers with significant pain.

4. Value proposition is compelling but only in qualitative terms.

5. Value proposition is compelling and quantifiable.

1. Many leads, few qualified prospects.

2. Significant pipeline of qualified prospects.

3. Customers are sampling but not yet buying.

4. Customers have verbally communicated intent to purchase.

5. Company is generating revenues through the delivery of its value proposition.

1. Lumpy revenues, low margins, capital intensive.

2. Profitable but difficult to scale.

3. Profitable and scalable.4. Highly profitable, scalable, but capital intensive.

5. Highly profitable and scalable.

1. Acquisition or IPO is unlikely.

2. IPO is unlikely and pool of potential acquirers is limited.

3. Several potential acquirers identified.

4. Exit via acquisition probable; IPO is possible.

5. Exit via acquisition or IPO.

1. Significant capital investment required. Investors likely to achieve modest returns even under best case

conditions.2. Significant capital investment required. Investors will probably receive a return of their capital but upside

will be modest.

3. Modest capital required. Investors equally likely to achieve a homerun or total loss of capital.

4. Modest capital required. Potential to become a homerun with a return of capital likely under most

conditions.5. Potential homerun opportunity. Investors will make money under most conditions.

Favorable risk/return tradeoff for

investors

Product/service is ready to sell

Value proposition is quantifiable in

customers terms

Customers have validated

Companys value proposition

BUSINESS MODEL

Business model is attractive and

efficient

Multiple exit opportunities exist

TRACTION


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MANAGEMENT 1 2 3 4 5 ota STATUSTransferable record of success. 0Ability and experience to leverage scarce resources. 0Appropriate functional and industry experience. 0Worked together previously. 0Team is complete. 0

MARKET 1 2 3 4 5Available market well defined and large. 0Market is growing. 0ompe on as en a e wea nesses. 0

Customers receptive to early stage companies. 0

Market entry by new competitors is difficult. 0

TECHNOLOGY 1 2 3 4 5ompany ase on un que or nnova ve use o ec no ogy. 0xper se n p ace o ma n a n an expan ec no ogy. 0ec no ogy s roa . 0

Technology is exclusive to Company. 0

TRACTION 1 2 3 4 5Product/service is ready to sell. 0Value proposition is quantifiable in customers terms. 0Customers have validated Companys value proposition. 0

BUSINESS MODEL 1 2 3 4 5Business model is attractive and efficient. 0Multiple exit opportunities exist. 0Favorable risk/return tradeoff for investors. 0

LEGEND

Great!!

Next to each question, place an '1' un

score (1 -5) for where you believe yo

3. Company Scoring Page

Please ensure that you only enter ON

for each row item, otherwise the total

be reflected correctly. The STATUS col

a red X if more than one score is

0

Need to focus here

Not so good

MediumGood

TOTAL SCORE


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MANAGEMENT

Transferable record of success.

Ability and experience to leverage scarce resources.

Appropriate functional and industry experience.

Worked together previously.

Team is complete.

REMEDIES & COMMENTS

No Company Score Recorded Yet





3a. Analysis of Company Score


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MARKET

Available market well defined and large.

Market is growing.

Competition has identifiable weaknesses.

Customers receptive to early stage companies.

Market entry by new competitors is difficult.







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TECHNOLOGY

Company based on unique or innovative use of technology.

Expertise in place to maintain and expand technology.

Technology is broad.

Technology is exclusive to Company.

TRACTION

Product/service is ready to sell.

Value proposition is quantifiable in customers terms.

Customers have validated Companys value proposition.

BUSINESS MODEL

Business model is attractive and efficient.

Multiple exit opportunities exist.

Favorable risk/return tradeoff for investors. No Company Score Recorded Yet











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MANAGEMENT 1 2 3 4 5 ota STATUSTransferable record of success. 0Ability and experience to leverage scarce resources. 0Appropriate functional and industry experience. 0Worked together previously. 0Team is complete. 0

MARKET 1 2 3 4 5Available market well defined and large. 0Market is growing. 0Competition has identifiable weaknesses. 0Customers receptive to early stage companies. 0

Market entry by new competitors is difficult. 0

TECHNOLOGY 1 2 3 4 5ompany ase on un que or nnova ve use o ec no ogy. 0xper se n p ace o ma n a n an expan ec no ogy. 0ec no ogy s roa . 0

Technology is exclusive to Company. 0

TRACTION 1 2 3 4 5Product/service is ready to sell. 0Value proposition is quantifiable in customers terms. 0Customers have validated Companys value proposition. 0

BUSINESS MODEL 1 2 3 4 5Business model is attractive and efficient. 0Multiple exit opportunities exist. 0Favorable risk/return tradeoff for investors. 0

4. Coach Scoring Page

Next to each question, place an '1' un

score (1 -5) for where you believe yo

Please ensure that you only enter ONE

for each row item, otherwise the total

be reflected correctly. The STATUS col

a red X if more than one score is

LEGEND

Need to focus here

Great!!

TOTAL SCORE

0

Not so good

MediumGood


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MANAGEMENT





Team is complete.

No Coach Score Recorded Yet

4a. Analysis of Coach Score

REMEDIES & COMMENTS






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MARKET


Market is growing.










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TECHNOLOGY





TRACTION




BUSINESS MODEL



Favorable risk/return tradeoff for investors.












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Company Coach Status

Transferable record of success. 0 0

Ability and experience to leverage scarce resources. 0 0

Appropriate functional and industry experience. 0 0

Worked together previously. 0 0

Team is complete. 0 0

Available market well defined and large. 0 0

Market is growing. 0 0

Competition has identifiable weaknesses. 0 0

Customers receptive to early stage companies. 0 0

Market entry by new competitors is difficult. 0 0

Company based on unique or innovative use of technology. 0 0

Expertise in place to maintain and expand technology. 0 0

Technology is broad. 0 0

Technology is exclusive to Company. 0 0

Product/service is ready to sell. 0 0

Value proposition is quantifiable in customers terms. 0 0

Customers have validated Companys value proposition. 0 0

Business model is attractive and efficient. 0 0

Multiple exit opportunities exist. 0 0

Favorable risk/return tradeoff for investors. 0 0

The purpose of this sheet is to ev

there are sizeable (2 or greater) d

where the company feels they are

feels the company is. Ideally the s

green check. The sections with a

reviewed and the Venture Catalys

consulted

BUSINESS MODEL

TRACTION

5. Company vs. Coach

MANAGEMENT

MARKET

TECHNOLOGY


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MANAGEMENT





Team is complete.

Great! This will definitely be an advantage moving forward and you

previous successes that your management team has had. Incorpora

doing and modify those that would be useful in your current venture

repeated and pre-empt problems areas that were encountered prev

Great! Having this ability and Experience can provide a competitve a

companies overall strategy in order to succeed.

For a software or other technology company, relevant technical exp

the door. Generally, founders have strong technical experience, so

good technical management experience on the team, as getting pro

more than one technical member, you need to consider how the res

founders communicate business "vision" in non-technical terms?

Good. Often a startup is formed when several colleagues leave a com

something new. Because they are familiar with each other's values,

one that the founding team is comfortable with. When entrepreneur

in the past, that's a good sign. For one thing, it's an endorsement ofimportant, the trust that typically takes so long to build is there from

Good. The management team is critical to the company, both opera

While outside investors can help in filling out the management team

and attractiveness to investors by filling in gaps in the management

Things are Good Responses


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MARKET


Market is growing.




Be prepared to provide a thorough definition of your target market

the problem and the size of the problem that your product or servi

define the customer, their behaviors, and how those behaviors can

profitable and sustainable fruition. Your understanding of the mardemographics should be supported by thorough research through r

industry or trade associations, government research, and other sou

investing their money in large, profitable, and fast-growing market

capitalists will probably not be interested. Your understanding of

critical to selling your venture to investors. Perform the necessary

reference those research sources. Additionally, you must determin

achievable for your venture. Be aggressive in your assessments, b

market penetration.

A demonstrated understanding of the market is critical. Be prepar

of growth for the market segment. Are the markets regional, natio

market, the more specialized knowledge and expertise is needed to

drive the market growth, and what is the likelihood that these fact

A thorough understanding of the competition and a well constructe

Cite the principal competitive factors in the market: product perfo

service, merchandising, price, and other factors. Know how you w

identify how the competition will react to your entry into the marke

It is imperative to know what factors will drive customers to your

upon which the customer will make his decision? Such factors may

availability, price, and service. Each factor and its importance rela

management should invest its time and money in the product deve

have different market segments, and do the customers in each seg

market have any special buying characteristics which should be co

other industry trends?

How have you determined the barriers, and how will you overcomewill want to see how you will overcome them. Desirably, your prod

create further barriers behind you as you enter the market. A tho

help you justify your target market share.


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TECHNOLOGY





TRACTION




BUSINESS MODEL




This is good because it will bring many investors to the table, but ens

the original founders of the company might not benefit from the succ

Is it unique/proprietary? Do you have a strategy for continued innov

a product or service that fits your target market?

Good. This will provide focus for the business and should allow you t

effectively.

Great! This puts your company in a good position going forward, but

value proposition. It is not discretionary. If you do not create and co

products, services and the people standing behind them then you put

Good. You should constantly be looking inside and outside of your ind

model for your business and you should not become complacent with

be the best model to get the company to the next level

Good. This will allow the company the flexibility to consider differentwith a mentor/coach/business leader to seek guidance and feedback

How unique is it and how sustainable is your position (sustainable co

your product is unique MATTER to the customers? Will innovations b

Have you planned for these?

Good. This will be important for the company to protect and expand u

bay for as long as possible.

This is good, but the company should exercise caution here. While th

and customers, the company should very carefully choose their targe

review in order to determine what the best course of action should b

company and the customers that they choose to serve.

Good. Investors will require assurance that you have full rights to th

If your rights arise from a license, you'll want to make sure the scope

obligations are reasonable and in line with market royalties. Is your

patented, and if so, how long does the patent last?


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MANAGEMENT





Team is complete.

Things can Improve Responses

It is never too soon to get started. The management team is c

attracting outside investment. While outside investors can hel

financing, you can increase valuation and attractiveness to inv

beforehand.

Many investors base their entire investment decision on the ma

expect a well-rounded team of professionals with experience in

positions and responsibilities that directly relate to the current

the duties, the successes, the experience gained, and how thes

experience is looked at favorably by investors as they size up y

industry experience an absolute must, but if you lack direct ind

experiences from other fields. Describe your abilities and exper

number of years you were in management roles? The number o

here is to present a track record that predicts future success.

Should be able to leverage scare resources to maximize the imp

of resources one must first understand the goals against which

If you are lacking technical talent, this is an area youll need to

that all prospective engineers take rigorous programming tests

important as the skill and ability. From a management team pe

engineering/technical management experience, and generally t

technologist. However, this may not be important if technology

If it is important, you need someone with experience in licensin

Often a startup is formed when several colleagues leave a comp

something new. Because they are familiar with each other's va

is one that the founding team is comfortable with. When entrep

them in the past, that's a good sign. For one thing, it's an endo

important, the trust that typically takes so long to build is there


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MARKET


Market is growing.




Investment of valuable management resources (including time

understanding of the customers' buying decisions. Research o

success factors are. Their knowledge of the customer should b

with a clear understanding of what drives the customers' purch

as performance, quality, reliability, durability, and service and

availability.

Investors will quickly conclude that a management team unfam

predict the amount of funding necessary to achieve success in

Obviously, the lack of a clearly defined market will diminish yo

long run. In the short run, you will be unable to raise capital a

investment community. In the long run, your venture will mos

time researching markets that your technology may enhance.

technology may be adapted. Limited market size limits the pote

venture. Even dominant penetration in a lesser market may no

investors. However, investors are strategic, and your ability to

your market (although not as large as hoped) and how to tap i

interested in smaller markets if they are experienced in the ma

market that may enable them to increase your penetration of t

already operate ventures within your market may appreciate w

increasing the size of the market). Research the investment so

investors for your venture. Finally, consider whether there are

product or service.

In a mature or declining market, your product or service must b

already available. Your key is to realistically demonstrate thatchanges the dynamics of this market. You must demonstrate w

favor of your offering. What will be your competitive factors th

Quality? Innovation? Reliability? Also, have others tried to pe

It will be difficult to raise money without a solid understanding

greatest temptations in the development of the business plan i

understate the competition. This can be self-defeating, since y

business plan. Moreover, prospective investors are unlikely to

the competition. Show how the competition could deter your p

the changing environment in these situations.


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TECHNOLOGY





TRACTION




BUSINESS MODEL




This might it difficult to raise sufficient capital to invest and grow

are any means to make the investment more favorable to invest

original founders are still able to benefit from any succes that th

The company should spend some time and resources to ensure t

product/services have been considered. Many times it will be on

market place and it allows the company to establish themselves

opportunity presents itself.

Without rights to use the technology, you can't move forward or

current or former employer or anyone else owns the technology

technology by assignment, license, or otherwise. The scope of t

goal, and any royalty obligations should be reasonable and in lin

How long and how much money will it take to develop? What ar

technology as planned? Are there others (competitors) develop

they to beating you?

A true value proposition is quantifiable with hard, tangible, grou

CFOs quickly understand and use to make decisions. Of course, a

and perspectives will need to be shown around particular CFOs

Value ultimately drives the decisions companies make when eva

solution options, including internal options. The value of a produ

quality in relation to the amount paid for it and it is important th

target customers that validates the value you believe your produ

You should consult with industry experts and benchmarks again

what business model is most suitable. You should also look outs

model that would work well for your business and might even pr

is found, do not become complacent but rather you should conti

determine if it will get the business to the next level.

You should consider if there are alternative exit opportunities. T

ablity to make an exit decision that is right for you and for the b

What is your competitive advantage? Are those competitive adv

It is important for the company to protect and expand upon theilong as possible. Find a way to ensure that the company is in cha

business because without this is will be difficult to create any si

might find itself losing market share to a competitor.

investment feasibility assessment

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