A FRAMEWORK FOR STARTUP ASSESSMENT
A four-step guide to evaluating startup and new venture ideas
Assessing the problem, solution, underlying business assumptions, and surrounding vibes of startups
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There are numerous reasons why we need frameworks to evaluate startups. Wanna-be entrepreneurs may have numerous ideas that they don’t know which to pursue or which to quit their jobs over. Rolled-out new business ventures may need to pivot business models, needing to evaluate moving from one base to another. Business leaders and investors may have questions about why ideas are not growing efficiently or as they would have expected them to. Venture capitalists need to analyze and understand the ultimate potential of a startup idea and build constructive communication mechanisms with entrepreneurs if they are to invest fruitfully.
In summary…
Early-stage investors and venture capitalists — way before they see a working product — need to see solid evidence that the new business idea has the potential to grow quickly. Four factors need to be analyzed when assessing the potential of a startup:
- The demand side — the problem, or initial conditions
- The supply side — the solution and offering
- The connectors — drivers, insights, or reasoning as to why the ‘assumed’ company, will successfully connect the supply and demand sides and create economic value
- The beliefs — the positive emotions, the excitement around the company and its people
What is a startup?
A startup is a hypothetical company that is designed or created to try to grow very quickly. So if a business idea is not aiming to build a company that grows very fast, then it’s just a small business.
A start-up idea is a ‘hypothesis’ about why a business model, could, potentially…
