Friday, 20 July 2007

How Do Venture Capitalists Evaluate Your Business Proposition?




I recently worked with some European VCs on an awards process for biotech companies etc. What I found fascinating was the set of criteria used to evaluate each company presentation.


Companies were scored out of 10 on the following criteria:
  1. General business idea
  2. Key technology
  3. Product pipeline
  4. Competitive advantage
  5. International strategy
  6. Sales & distribution channels
  7. Management team
  8. Financial situation
  9. Exit strategy
These criteria - big broad issues and criteria - are an alternative to the FiMO and RECoIL scores used in 'Kick-Start Your Business' (where you look at a business's 'performance to date' and 'potential to grow'). FiMO and RECoIL are used by several leading institutions in the banking and business support industries in the UK.

Remember, an attractive business (to an investor) has the following attributes (consistent with the list above!):
  • Underlying, repeatable, sustainable profits
  • Reference and trophy clients
  • Distinctive capabilities – things that make you unique
  • Core competences or strategic assets – what you are really good at
  • A senior team to take it to the next stage.
Do score yourself on a scale of 1 to 10 where 1 is a low score and 10 is a high score... What are you going to do now, today, to improve your scores? Stop messing around at the edge of your business and start to make the tough decisions to take the business to the next stage.





RELATED ARTICLES:Getting Off To A Flying Start - article from The Director Magazine
Escape Options - buy, sell or exit? an article


RELATED LINKS:
Kick-Start Your Business - the book



Post a Comment