Idea Filtering: How Professional Investors Validate Winners

PROVING THE DEMAND:

Defining the market niche (who needs your product)

Is there convincing evidence of a real need (customer pain)?


THE MARKET:

Determining the number of potential customers

How many of the product do customers typically buy now annually?

How much do consumers pay now?

Computing the market in dollars. Is there an adequate market (potential reward) to balance the investor (or licensee) risk?


THE REWARD:

What would it cost to produce, deliver, service the product?

Profit projections


THE RISK:

Calculating risk of Product Failure (probability product will meet specs, can be produced at target cost, can get into market in quantity quickly, win over and retain customers).

How much will it cost to complete R&D, produce working prototype, production model?

Ferreting out the competition. Will they sit idly by?

Analyzing and disclosing strengths and weaknesses of alternatives.


PLUS A BRIEF INTRODUCTION TO EFFECTIVE INVESTOR/LICENSEE RELATIONS:

The need to plan for the investor "exit" (how investor will retrieve capital and return on investment)

How to find the right investor or licensee

Pitching ideas to investors or potential licensees

Based on Product and Investor's risk versus reward, what is a fair (ie - competitive) share for investor or licensee?

IP Protection (NDAs and patents). Don't kiss on the first date.

About Mike Roer:
Mike Roer is the Executive Director of the Connecticut Venture Group.

CVG was the first association of venture investment professionals. Its mission is to stimulate investment in high-growth companies. Through chapters in Hartford, New Haven and Stamford, the organization produces technology-focused seminars and expositions, updates on financing and market trends, university tech transfer conferences, and the annual Crossroads Venture Fair. Companies that have approached CVG for funding have raised over $2 billion in venture capital.

Roer is also founder of the Connecticut Angel Guild, an organization established to fill the funding gap for start-ups by delivering training and administrative support to high-net-worth private investors and connecting them to promising new ventures.

Roer is President of the Entrepreneurship Foundation Inc., a 501(c)3 supporting entrepreneurship education and execution.  Programs include the Connecticut Consortium of Entrepreneurship Educators, a forum for the exchange of best practices among professors; the Connecticut Collegiate Business Plan Competition; the annual University Venture Fair; and the Entrepreneurs Society.

Roer is also the author of a text on Entrepreneurship and a frequent lecturer at universities.

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