As an organization that supports early stage ventures, we get to review hundreds of ideas annually.
In reviewing ideas, we are looking for experiments worth taking and we have developed a system for filtering these ideas.
This is quite important for us because we are placing $5000- $25,000 of our hard-earned cash plus our time, our expertise and our networks behind those experiments and we are looking to increase likelihood of success at all stages.
Invariably, some fail but that is expected as it wouldn’t really be experimenting if we could predict a 100% success rate every time.
Through our OPEN CALL, we are looking for ideas that solve very clearly defined problems felt by a significant number of Nigerians.
We are looking for simple, interesting and creative solutions to these problems that demonstrate consciousness of how the target audience is currently meeting the needs for themselves and the deficiencies in these alternative solutions.
We are also looking for individuals/teams that have the passion & competence to execute these ideas immediately & into the future.
For us, this combination of a clear need, a large potential customer base, the right solution & the right proponent/team are necessary conditions for us to engage with ideas submitted to us. A lack of ANY of the four may mean us not engaging.
In the course of our work with venture owners, we help them hone these three critical ingredients further while helping them develop a sustainability strategy (viable business model) and strategy to reach as many customers as possible. That is the value add of being in our pre-incubation programme.
There are certain bare minimums we need to see in these three areas or we won’t engage. In the following posts, I’ll explain what we mean and look for in the three areas.
- A Very Clearly Defined Problem/Need/Opportunity
The businesses we support are not created solely for the purpose of making the most money possible. They are created to provide important value to a large number of potential customers.
At their heart, they improve quality of life for a large segment of the population directly or indirectly.
To maximise the value you want to produce, you need to demonstrate clarity on why the value you are producing would be considered important by your customers for it to be paid for.
This “Why” is encapsulated in the need you are seeking to address, problem you are seeking to solve or the gap you seek to fill for the customer. This seems very easy & obvious but many stumble at this stop due to some common mistakes.
To do it right, explain the need from the point of view of the pain you are seeking to ease for a specific customer segment.
The pain, need, gap, problem or opportunity is often negative which is why the customers will value the solution you are providing. Express the need in all its negative glory.
The clearer you are in expressing the need, the easier it would be for anyone to realise the value of your potential solution & business.
Common mistakes made in expressing the need are:
a. Expressing the need as absence of a particular solution
b. Expressing the need in too abstract terms — make it specific & concrete
c. The need is too big & wide that you literally have to become government to address it
d. The need is too narrow that only one solution is possible
e. Too many needs at the same time, focus on one important need
f. The need is more of a want (nice to have) than a real need
g. The context of the need is unclear
2. For a clearly defined segment of our society
Who has the problem you are creating a solution for? This has to be a clearly defined customer segment and it cannot be EVERYBODY.
Be specific about your target demographic. i.e primary school children attending public primary schools in big cities in Nigeria; working professionals aged between 24 & 30; low income households in Lagos.
Even if your product will eventually be used by everybody, you need to clearly state who the early adopters are. This is the linchpin target that you will use your product at launch.
You will be designing the product with their pain points in mind. They will also help you test and improve the product offering before you scale it to the masses.
The clarity with which you describe this target segment and your understanding of their needs & why they will adopt your solution says a lot about how much thought and work you have given your idea.
By all means speak to this target audience in advance and clarify any assumptions you may have about their needs and to problem.
If you are a part of this target segment even better. But be certain your understanding of the need is universal for the whole segment and not an exception or an isolated case. The way to discover this is to ask, not leading questions but ones that give you impartial information.
State your primary target segment but feel free to identify your high priority segments with clear need that your solution can meet.
In your application, focus on one segment usually the largest size group with the most pressing need.
3. Simple, Interesting and Creative Solution
Your idea to solve the clearly stated problem should be describable in 140 characters.
If it takes too long and a lot of context setting to explain your solution, it is too complicated and will be too hard to sell.
The link between the solution and the problem you want to solve should be direct. It should be clear how the solution is solving the problem. The more indirect the solution is in bringing the desired change, the more is revealed about how much you don’t know about the problem you are trying to solve.
A lot of the best ideas take concepts from different sectors and apply them in the sector you are trying to create a solution in. For example, using the incentive system from the airline industry to motivate people to recycle, or using the distribution ideas from the soft drink industry to organise blood logistics.
The innovation in your idea could be in the product, in the process or in the business model. You need to dissect your solution to identify areas it is innovative in.
You also need to be able to simply describe your solution so that we get how it addresses the problem and we see the unique elements that make your solution interesting.
Simply delivering the same way everyone else delivers will not work in a crowded market. You need a unique value proposition embedded in your solution.
In defining your solution, you also need to reflect understanding of how the target audience are currently meeting the needs identified and what stands your solution out.
In most cases, there wasn’t even a vacuum. People are meeting the needs for themselves and someone will want to know how your proposed solution stands up against the alternatives.
We need to be able to tie this to the most important values that influence solution choice and usage decisions by the customers.
4. The passion and competence to execute
Some investors say that they invest in the people and not the idea. Some go as far as saying they don’t even care if the idea is crap, but a great team can execute a crap idea into being good.
While we don’t agree with the latter part, we buy into the sentiment that a good person/team executing the idea is critical to whether it’s a winner or whether it goes bust.
Even great ideas are only as good as how they are executed.
Two things are critical in the founding team — Passion and Competence.
Passion defines how driven you are to effect the change your idea is designed to bring. It is reflected in a deep desire to make that difference and it’s usually the last reserve fuel in the tank when motivation is at its lowest (and trust me, at some point it will be very low).
It speaks to the affinity of the founders to the problem they want to address and sits in the emotions.
One of the key ways of revealing this is in the story of how the founders got to the idea they are pitching.
Passion has to be for the issue being addressed not for the name or income to be made by addressing the issue. The income is an important side effect but it shouldn’t be all.
Passion is the right brain side of starting a business, it is critical to whole brain functionality.
Competence is the left brain side to starting a business. Do you have the skills and experiences required to execute the idea you have defined?
Competence comes from training (education) and your work experience. It speaks to the skills required to run the day to day operation to deliver your business.
Here we are looking at the complementary experience of the founding team recognizing that one individual may not know all it takes but can balance knowledge and experience with other people in the team.
Competency can also be hired for but the founders must have at least the core competencies to deliver on their idea and the know-how to effectively engage any experts they may have to bring on board in the early days.
You need to be able to communicate the passion and competence that exists in your team to execute your idea if you are to be taken seriously by supporters. This is the answer to the question, “Why YOU?”
We are currently looking for ventures to admit into our pre-incubation programme. Does your idea fit the bill? Apply at bit.ly/CcHUBPreInc.
Share your thoughts on our selection criteria in the comment section below