Over the past years, I facilitated and participated in many innovation bootcamps for corporates. After months of hard work, the end is always the same: an investment pitch to the management team. The decision of that management may vary
Although it’s not science and every management team takes decision in a different way; this is an overall list of criteria that came back, over and over again, to make a proper go-no-go decision.
*VALUE OF THE PROBLEM*
1. Are they trying to solve a real problem?
People pay money for proper solutions to a problem, to win time, to get rid of frustrations, … As long you’re not creating art or considering this project as “playtime”, you need to understand the problem(s) you’re trying to solve. It’s by understanding the problem that you can create meaningful new products & services. Make sure your CEO understands that this is indeed a real problem/need!
2. Can they indicate that there is a sizeable market?
Corporates think in bigger numbers. This doesn’t mean you can start small in the beginning, but shareholders are interested in big enough markets. Make sure the final market-size you’re after, is in lines with the company strategy.
3. Is this market growing?
It’s very important for a company to understand in which stage they can step into the story. Maybe the market is not growing yet (too early, too radical). Are they stepping into a train that’s already running? (innovation follower). Or are they on the front door of a new goldmine (innovation leader). Companies think in terms of growth, make sure concept does too!
*QUALITY OF THE OFFERED SOLUTION*
4. Do they offer a good and unique solution?
Unique doesn’t mean there’re no competitors. We’re looking for the reason why a customer would choose your product above another similar one. What’s your UVP (Unique Vale Proposition). Make sure the management team understands this uniqueness and is convinced they’re looking to an opportunity.
5. Do they understand their customers?
Lean Startup, Design Thinking, … Really understanding you customer has become standard. Doing a couple of interviews to “prove you’re working lean” isn’t the same. If you can show some early adopters, some businesses that already used your product in return for feedback you’re on the good path 😉
6. In this concept scalable?
Where startups often own the market-validation scene, corporates are experts in scaling. As said before, they want to see growth. Cut your concept in different pieces and align them with your go-to-market plan. Scaling can happen either by selling your offering to more customers & other markets or by multiplying your amount of offerings to your projected user base (eg extra features, services, …).
7. Can they make money?
I don’t believe in finding your business model along the way. Make sure you have a clear plan for making money (new business), saving time/resources (cost-cutting) or acquiring new customers (marketing-investment). It’s all about costs vs benefits.
8. Are the estimated resources realistic?
If there’s a financial guy in the jury (in a good jury there should), make sure your numbers are realistic. Corporates are not startups. People, resources, marketing cost a lot of money. Know your numbers and time needed.
I won’t forget that time a corporate team was asking for a €15.000 investment to build that awesome new app. First of all this was an underestimation (€75k for the MVP would be a better start). They didn’t calculate their own employment-cost to make it a reality (+€100k) and only considered development costs (no +€100k for basic marketing, overhead, … ). Although their ideas was cool. The businesscase was not. “This is pocket money. It made me laugh. No more questions”. Just a summary of the jury’s feedback. Please do your homework!
9. Break-even? Investment?
Although it’s hard to predict break-even, management teams often take a decision based on the time needed to make profit. If they’re not used to corporate lean startup projects, I’m sure they’ll ask for it. So at least have it prepared as a backup slide. Talking about investments, try to discover what’s in line with the management’s expectations. If you’re asking for a €1M investment and there’s only €300k available, you know the decision before you’ll have to pitch! The lower the risk for the company (time to break even, low investment needed) the higher the chance you’ll get a go!
10. Entry advantage or entry barrier?
Developing a new concept as a corporate can have it’s advantages. But it totally depends of the needed knowledge, technology and infrastructure. Ask yourself the question. Why should my company do this? And why can we do it better/faster than others (eg. non-corporate startups, competitors). Concepts with an entry advantage will always score better than others.
11. Can we do this?
Having a good idea is one thing, can you also build and market it? If you don’t have the necessary internal resources, you’ll need proper partners. Whether you need to acquire knowledge, infrastructure, … make sure you’ve spoken to the right partners and know what they ask in return.
12. Shareholder alignment?
Last, but not least, the concept has to fit in the strategy of the company. If, even on the longer term, a lot of investments are necessary; someone needs to approve this. If he/she can’t convince the final decision makers (eg shareholders) why the company should do it, your case is lost. I always close my pitches with the “Why should company X do this”-slide.
Any feedback? Feel free to comment!