How to Become Investable in 13 Steps

Time kills all deals. For startups, speed to market has never been more critical. When we're investing in a company at BCG Digital Ventures, we look at how well the company will scale. We're focused on idea to Series A. Our startups must go from paper to market within 12 months and to scale within 36, or we fail them.

We've developed 13 questions to help achieve the speed to market and scalability required in today's rapidly accelerating landscape.

1. Purpose

What's the purpose of your company? Does it satisfy a strong market demand? Purpose-driven companies attract (and retain) the right talent, maintain customer loyalty and drive profits, outperforming the stock market by 206 percent over the last decade, according to Havas Group.

At TOMS, the purpose is purpose. By providing one pair of shoes to a child in need for every pair purchased, TOMS was able to tap into what motivates its customers -- social change.

2. Friction

What market friction are you solving? There are three types of frictions that can turn into an investment opportunity for us:

1. Market friction: We look to uncover (not create) our market through a social, economic, tech or regulatory change.
2. Expected friction (access): Once we uncover a market, we then need access to it by looking for inefficiencies and pain points through ethnographic research.
3. Latent friction: Once we find a pain point, we then need to make money. We do this by designing experiences people didn't know they wanted until we showed them (i.e. the Steve Jobs theory).

The rise of dockless scooter sharing points to an expected friction well-solved. E-scooter sharing platforms like Bird and the DV-incubated Coup have solved this by allowing users to simply unlock the scooter with their phone and leave it at their destination for the next rider.

3. Why now?

Is your idea too early/late to be in-market right now? A beautifully designed product with an incredible user interface won't cut it if either the technology or the market wasn't ready for it.

Before Bitcoin, there was Flooz. Launched in the late '90s, this digital currency managed to raise $35 million, but shut down shortly after the dot-com bust as the market widely denounced "internet money." Today, there are more than 1,900 cryptocurrencies in the market. It's not always what you build, but also when you build it.

4. Corporate alignment

What corporate assets can you leverage? At DV, nearly everything we invest in has a corporate partner. At the beginning of a venture, we look across our partner's value chain to find a way to leverage a piece of the existing business. In doing so, we create new market value and an unfair advantage. If someone wanted to replicate what we've built, they would need to re-create not only the startup, but the conditions of the corporate partner.

Unilever's acquisition of Dollar Shave Club is a great example. By joining Unilever, Dollar Shave Club instantly gained access to millions of customers, legacy relationships with retailers and other resources it would have never had as a startup alone. In turn, Unilever was able to add a fresh, sexy brand to its portfolio, keeping younger consumers buying for years to come.

https://www.entrepreneur.com/article/317863

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by Idham Azhari