Assessing Venture Viability: Preliminary Screening of the Opportunity

Analyzing venture potential upfront.

Introduction

Before diving into a new venture, founders must thoroughly assess the opportunity across critical areas - the problem, solution, market, team, and viability alignment. This preliminary screening provides data-driven insights on whether to proceed or redirect efforts.

We recommend a five-step pre-screening process:

1. Frame the Opportunity - Define customer needs, success measures, and hypotheses around the problem to solve.

2. Screen Early Solutions - Evaluate multiple concepts across dimensions like value proposition, feasibility, proprietary merits, and development requirements. 

3. Screen the Marketplace - Research the competitive landscape, understand the broader ecosystem and assess the availability of startup infrastructure support.

4. Screen the Founders - Analyze founder interests, capabilities, resources, commitment readiness, and any red flags.

5. Make Go/No Go Decision - Review all analyses to determine viability across critical areas. Establish next steps, whether to proceed or redirect.

Taking the time upfront for robust analysis grounds founders with targeted data to allocate resources most efficiently. It also allows capitalizing upon windows of opportunity through evidence-based strategic fit and viability decision-making. 

This five-step approach provides a framework for preliminary screening before fully committing to a new venture. Let's explore critical questions and considerations within each area.

Table 1. New Venture Pre-Screening Protocol

1. Framing the Opportunity 

Before researching potential solutions to customer problems, you must deeply understand the opportunity and customer needs. Articulating the specific customer context, critical behaviors required to meet their goals, how they measure success, and the obstacles they currently face establish clarity on the problem scope.

Rather than making upfront assumptions about required solutions, take an outside-in view focused on customer goals and barriers. Pinpoint one to three high-impact customer behaviors that enable desired outcomes through detailed analysis. This strategic approach reveals where to target for maximum results.

With the opportunity framing set, outline hypotheses regarding target customers and their needs. Capture details on their specific desired outcomes, what behavioral changes will lead to success, how they will measure progress, and what barriers inhibit their goals currently. Refine these assumptions through discovery techniques like interviews and journey mapping before extensive solution scanning.

Connecting customer needs to the benefits your solutions could provide assesses the alignment of opportunity-solution fit even in these early stages. Identifying gaps between what customers want to achieve and what your solutions propose to deliver represents opportunities to tailor your concepts to the actual outcomes sought. This alignment check validates where solutions should aim before diving deeper into designing and developing them.

Keeping the end in mind of customer priorities is vital. Discover through research which one to three outcomes take precedence when resources are constrained. This prioritization brings the "must-have" results into sharp focus to orient solutions toward product-market fit.

2. Pre-Screen: The Early Solution

With clarity gained on customer needs and the targeted market opportunity through your framing exercises, it is now feasible to envision potential solutions. It is crucial not to settle on assessing only one single early idea. Instead, founders should use pre-screening to shape and evaluate multiple concepts. This approach avoids locking in fixed assumptions around just one product or business model.

Equally as significant - do not execute the pre-screening in a vacuum solely from the founder's perspective. Seek customer input from the very first conversations once initial concepts emerge. Early customer dialogues centered on understanding how they solve their problems today reveal which alternative products or vendors they view as competition. Often, the competing solutions buyers consciously consider differ from all the existing marketplace options founders may see on the periphery. Let actual buying behavior uncovered in discovery lead your customer-back view of competitive offerings rather than the other way around.

With actual customer lenses guiding viewpoints, conduct feasibility analysis across four critical dimensions of your multiple nascent ideas:

Solution Positioning 

Start by assessing how well your early concepts serve your target customer's needs and deliver substantial value. Get clarity on which customer pains it solves, the urgency and priority of those needs, which product attributes appear most important to outcomes, and how much it differentiates from current options customers have today. Also, examine what substitute products or services customers might consider if your solution did not exist. Outlining a value-based price level that customers could likely accept is also insightful. Remember, the key to positioning is profoundly understanding the few vital behaviors and barriers to overcome, thus enabling customer outcomes.

Solution Feasibility

Next, dive into evaluating overall feasibility across the critical dimensions of financial, technical, and legal viability. On the economic front, map out an early cost structure based on required operating expenses and resources. Combine this with your pricing analysis to make early market size calculations rooted in customer willingness to pay. Even early, this financial model shows critical funding requirements and helps determine if sufficient free cash flow is possible over time. On technical feasibility, answer foundational questions around essential functionality and the complexity of building and delivering the complete solution. Determine what specialized expertise is beyond the founding team's skills. Finally, explore regulatory considerations around industry-specific standards, patentability potential if proprietary protection is essential, and even exposure to liability claims.

Solution Proprietary Status

As you screen early ideas, assess the proprietary merits of each concept rather than assuming protection is impossible or guaranteed. Explore dimensions such as patentability potential by understanding if aspects of the product, process, or business methods can potentially meet legal protection through filings. Similarly, evaluate whether the solution leans heavily on expertise or data assets that provide durable competitive advantages before others replicate. Examine if design complexity erects barriers against other players quickly copying without years of catch-up in engineering or product development. Lastly, determine if branding over time can ascend your solution to a command premium positioning unmatched by me-to projects. Evaluating these proprietary dimensions guides decisions on whether concepts should be open or actively protected. It also reveals assumptions around inherent complexities competitors would struggle to recreate capabilities for quickly.

Solution Development Capabilities

With some analysis of positioning and viability, also honestly assess the capabilities required to develop and launch your conceptual solutions successfully. Examine what relevant experience exists within the current founding team based on past ventures, roles, or education. While no team can cover all aspects, determine where the most significant capability gaps exist to deliver your full business model. This analysis highlights additional hires likely needed and whether you need to pull in subject matter experts in an advisory capacity. Take stock of the physical resources required and make initial lists of partnership connections to augment the team's knowledge and networks.

In summary, pre-screening a range of early concepts through the lenses of your customers prevents locking down assumptions without evidence. Take advantage of discovery to reveal solutions buyers already consciously consider as competition today. Maintain an openness to shifting your concepts based on these valuable buyer perspectives.

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3. Pre-Screen: The Marketplace

Like profoundly understanding the customer needs, founders must thoroughly examine the existing competitive landscape shaping the market opportunity. By identifying current solution providers, substitutes, key experts, and influencers, a clearer picture develops of where potential value gaps exist for new entrants. Keeping a pulse on competitor offerings and ecosystem partnerships also enables adapting your positioning for differentiation and complementarity to drive adoption.

Classifying Your Opportunity's Industry Category

As you conceptualize a new venture, identifying where your business aligns within standard industry classification systems provides helpful directional framing. Consider researching codes like NAICS identifiers that specify economic sectors, subsectors, and groups. Analyze where your offerings compare against competitors and substitutes that self-select these codes for their operations. Additionally, explore industry verticals like fintech or health tech that blend across traditional classification boundaries.

Benchmarking your venture against established category leaders, rising disrupters, and adjacent market threats gives insights into positioning differentiation. Tracking regulatory considerations helps navigate legal tradewinds turbulence ahead. Investigating potentially integrative zones adjacent to your opportunity spotlights partnerships for infrastructure security ahead of scaled scrutiny.

Essentially, this landscape mapping illuminates possibilities within industry trends. It also informs commercialization and growth strategies purposefully tailored to target industry ecosystems.

Understand the Competitive Landscape

As entrepreneurs envision a new solution, it is vital to acknowledge existing alternatives already seen by customers as viable for their needs. Rather than assuming a vacuum, purposeful investigation reveals where gaps may exist in the current landscape and how emerging offerings may sustain differentiation amid competition.

Customer decisions rarely consider a single optimal choice - they weigh options across many selection criteria, trying to maximize outcomes while minimizing compromises. Understanding this complex decision matrix through customers' lenses sheds light on competitive tensions influencing preferences. Additionally, continually tracking competitor responses to shifts in market preferences guards against disruption risks once pursuing the opportunity.

With this dynamic competitive context in mind, categorize market alternatives across:

Direct Competitors

Identify companies, including emerging ventures, offering the remarkably same core solution for the same target customer segment. For example, direct food delivery mobile apps compete locally. Study product positioning, features, business model, pricing, and public customer feedback. Expand investigation to indirect sites like review platforms to cover blind spots. Analyze strengths and weaknesses. Assess talent and funding behind high-potential startups. This landscape review spans both established players and new entrants.

Indirect Competitors

Look into companies providing alternative solutions that solve the same customer problem or satisfy similar needs. For example, food kit delivery versus takeout. Customers likely compare them as alternatives despite different value propositions. Analyze their positioning strategies and product roadmaps as well. Uncover why customers may choose options over your solution. Assess partnerships indirect competitors pursue to deliver additional value.

Substitutes

Investigate offerings that deliver comparable benefits or outcomes through entirely different methods than you envision. For example, renting shared vehicles versus owning. These may appear in distinct product categories but have overlap in visibly solving users' needs. Assess how messaging addresses mutually desired outcomes despite vast solution differences. Identify what substitution threats may look like earlier for preparedness.

Researching the competitive landscape provides an invaluable perspective on customer options, market gaps, product strategies, and key differentiators. Rather than assuming uncontested terrain awaits, anticipating existing and emerging competition prepares to position unique value propositions, building ecosystems strategically, and pacing innovation per market response rates.

Ongoing tracking of competitor intelligence continues fueling these efforts, but establishing an initial landscape equips the subsequent direction setting. Simply asking customers early about alternatives considered, without biasing prompts, reveals perceived substitutes. Let consumer lenses guide competitive categories, not founder assumptions lacking buyer context.

As new data exposes outdated assumptions, promptly integrate learnings into refined opportunity framings. Combine ongoing secondary research with regular discovery dialogs to create a competitive advantage from more insightful adaptations before rivals recognize signals.

Understand the Wider Ecosystem

While passion for the solution often fuels founders' tireless drive, innovative ventures do not succeed operating in isolated vacuums. Beyond the specific customer-to-solution fit, the path to product also relies on navigating and integrating with elements of a supportive business ecosystem. This collaborative context aligns interests between your core value proposition and complementary capabilities needed for user accessibility, operational efficiency, or measurable impact.

Therefore, identifying critical roles spanning this more expansive ecosystem space surfaces crucial pilot partners, early proof validators, influencers-as-advocates, and fellow builders near enough to your vision if appropriately engaged. Once proven, mapping existing networks reveals where your target audience already gathers for community trust radiation on your offerings. 

Investigating infrastructure adjacencies highlights integration opportunities better than head-to-head competition. Understanding your ecosystem allows strategically fitting into solution chains rather than stretching standalone beyond inherent capabilities.

With this interdependent framework as guidance, categorize existing and potential players across these ecosystem archetypes as you conduct more comprehensive market research:

Experts and Thought Leaders: Respected authorities that drive cutting-edge innovation, research, and validation in your product domain or technology area. Partnering early gains their influential endorsement and expertise. As a starting point, you should identify who the "experts" are in your industry or science and technology area. This emphasis is significant if your product differentiates itself based on emerging technologies or evidence-based science. Many entrepreneurs create products marketed as providing a specific benefit to consumers. You must validate the efficacy of your product by working with domain experts in the particular field in question. For example, if you are developing a product that promises to provide specific health benefits, you will want to have the claim backed up by scientific research conducted by experts. No matter the product, you will want to engage the experts and thought leaders in the domain of the problem you hope to solve for the customer. Experts will have a depth of experience that can give the entrepreneur a better understanding of what the customer is experiencing and how current solutions work. This knowledge is essential to build a product that optimally solves the problem for the customer. 

Influencers

Industry analysts, prominent bloggers, vocal consultants, and advisor networks influence market opinions for solutions in your space through reviews and commentary. Early in the process, identify key individuals and firms your target customers turn to as trusted advisors when evaluating offerings. Securing advocacy from a subset of credible influencers protects public perception when competition invariably attacks an ascending player. Consider pitching or providing early testing access to sympathetic influencers who will likely grasp your value proposition quickly based on the depth of sector expertise.

Supply Chain Partners

Drill down into the upstream and downstream providers, enabling delivery of your offerings with special attention on concentrated sources of unique ingredients, proprietary components, logistics infrastructure, contract manufacturing scalability, and regulatory approvals. Are there mission-critical suppliers or platforms that heavily shape the ability to deliver solutions? Prioritize continuity planning with these sources early, even when dependent on single entities, until redundancy gets established.

Channel Players

Public or private marketplaces, existing platforms, association partners, resellers, and other route-to-market access points remove barriers between your solutions and target customers. Evaluate onboarding criteria against your capabilities today and plot how capabilities grow to qualify for expanded presence with time. Shared distribution goals when interests align enable faster adoption and allow win/win revenue sharing instead of solo promotions. Consider incentivized affiliations where embedded partnerships spur advocacy and co-marketing lengths.

Infrastructure Providers

Adjoining solutions to complementary needs in your customer's ecosystem provide hand-off pathways when users expand usage into adjacent problem spaces. Strategic alignments with these infrastructure players allow seamless unlocking of additional accessibility, capabilities, insights, and value once initial offerings are adopted. Especially consider open integration capabilities early in foundational developer work to enable building upon rather than competing with leading platforms in your solution space.

Existing Networks

Tapping into preexisting alliances, trade associations, member-based groups, or repeat in-person events provides founders access to dense clusters of potential end users and credibility borrowed from years of community trust building. Before expensive broad outreach, finding where target customers already congregate, either virtually or physically, amplifies early relationship building and pilot testing with engaged subgroups more prone to providing constructive feedback. Especially when protected inner circles have substantial barriers to entry, look internally first before attempting cold engagement from the outside lacking context. Examine criteria for joining leadership boards or speaking roles that lend visibility. Each small foothold expands fragile legitimacy until consistent delivery builds a standalone reputation.

In addition to mapping ecosystem roles, prioritize identifying experts, influencers, partners, and networks you can engage with. During discovery, start compiling names and contact information of:

• Respected authorities that would validate your solutions

• Bloggers and analysts who can drive early perception

• Specific suppliers capable of supporting operational needs

• Distribution channels used by your target segments

• Complementary solutions for strategic integrations

• Conferences and tradeshows to network

Knowing key ecosystem players lets you gather intel, build relationships, and secure partnerships vital for development and go-to-market success. Reach out to schedule preliminary conversations around capabilities, experience applicability, and willingness to collaborate potentially. The earlier, the better in assembling an ecosystem with a shared vision.

Scoping the competitive arena and collaborative ecosystem you plan to operate provides invaluable context. Use these external perspectives to refine your venture's solution screens and feasibility testing with a differentiated market role in mind. Additionally, prioritize initial outreach to validate assumptions and build early relationships with key players for market viability. With watches set on market activity and partnerships secured, founders can determine where they add unmatched value.

Assess the Startup Support Ecosystem

In addition to industry players directly tied to customer value delivery, founders should map support infrastructure enabling venture success locally, including professional services, funding channels, educational programs, and incubator/accelerator platforms. While national names garner the most visibility for broad best practices, directly applicable services with regional access tend to provide more custom-tailored assistance.

Research professional consultants and agencies with relevant specialization to reinforce inherent team capabilities on legal, finance, marketing, IT, or R&D fronts. Connect with HR firms guiding local technical and business talent acquisition compatible with current funding realities. Bookkeeping accuracy saves more than it costs upfront.

Check if local angel groups, early-stage VCs, crowdfunding platforms, and government grant programs exist in your industry's vertical and growth stages. Weigh niche options against generalists with expectations possibly skewed by dissimilar portfolio company traits. If pursuing outside capital, determine optimal sequencing given milestones required before rewarding fundraising traction materializes.

Find alumni leveraging educational institution ties, nearby incubators, or accelerators with industry track records augmenting your capabilities with scaled resources from testing infrastructure to mentor community access and visibility opportunities impossible solo. These channels allow for the simultaneous refinement of customer discovery and product market fit clarity while building underlying operations.

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4. Pre-Screen: The Founders

In parallel with evaluating the external opportunity and solution realities, founding teams must shine an honest light inward to examine alignment across motivations, capabilities, resources, and personal readiness for the relentless uncertainty ahead. Avoiding overly optimistic assumptions and addressing misalignments early increases the likelihood of sustained momentum.

Founder Interests and Motivations

Assess deeply if this venture opportunity ignites an intrinsic passion within or mainly centers on financial motivations. Aligning to a higher purpose fuels resilience during inevitable dark days in ways potential wealth alone cannot sustain long-term. Additionally, evaluate if the timing fits the current personal and professional season of life. Inflection points like new families or demanding professional roles increase risks of distractions thwarting complete dedication. Confirm upfront that prioritizing this venture makes logical sense before rationing time, energy, and reputation on irregular external pacing.

Founder Capabilities and Resources

Analyze gaps between current team expertise and required competencies across technology, operations, and market-connecting domains critical for an envisioned solution. Lacking internal capabilities without sourcing alternatives leads execution to stall out. Diligently map the landscape of missing elements needing shoring up through partnerships, co-founding, advisory boards, and early strategic hires. Inspect existing accessibility to the financial runway, professional services, physical assets, and infrastructure, enabling testing concepts without immediate external dependencies creeping in. Runway fuels exploration without revenue pressures. Networks yield invaluable resources gained only over the years. The wider the initial constraints net, the further innovation can meander sustainably before cash flow realities encroach. 

Assess Commitment Readiness 

Determine honest personal readiness across family, career, and mental health dimensions to commit fully over the years despite difficulties. Transitioning vision into reality demands resilience strengthened by securing purpose, skills, resources, and absolute dedication in the face of uncertainty. Measure current capacity across relationships, rest, finances, and motivation to sacrifice nights, weekends, and stability for venturing into unknown terrain powered only by internal drive, not external pressures. Confirm alignment to weather emotional rollercoasters tied to expectations and milestones. If foundations feel shaky, bolstering personal infrastructure takes priority ahead of organizational building.

Identify Red Flags or Dealbreakers 

Founders should highlight any glaring red flags or dealbreakers uncovered through their fit assessment across motivations, skills, resources, and commitment capacity. These may include:

• A lack of personal passion or alignment to values about the venture opportunity itself

• Discovery of a severe skills gap with no viable way to fill it through partnerships or hiring

• Insufficient financial resources to get through an initial testing period

• Inability to dedicate the necessary time commitment due to other obligations

Early awareness of these limitations or warning signs allows pivoting the opportunity, team, or timing before attempting to push forward. Not every venture concept neatly aligns with current realities - know when to shift gears based on honest self-assessment. Even slight mismatches spell disaster once the actual demands of building gain momentum.

5. Make Go/No Go Decision

Conduct an alignment assessment across all areas after thoroughly pre-screening the opportunity, solution, market landscape, and founding team dynamics.

Critical steps for making the go/no go decision:

• Review Analysis Notes: Compile notes, research data, feasibility studies, and other critical analyses from assessing the opportunity, solutions, market, and founders.

• Identify Misalignments: Determine if there are any significant misalignments uncovered across the customer problem, your proposed solution, competitive landscape, founder skillsets, availability of startup support infrastructure, etc.

• Gauge Severity: Assess the severity of any misalignments or gaps identified. Which ones are addressable or require only minor pivots vs. major showstoppers?

• Outline Pivots Needed: For addressable gaps, outline pivots required, whether reframing target customers, adjusting solution capabilities, modifying business model, etc.

• Complete Capability Analysis: Identify remaining capability gaps that require additional co-founders, hires, partnerships, or advisory support. Highlight the most critical to fill.

• Re-evaluate Timing: If major pivots are needed, assess if it is better to table the venture work entirely for a more aligned opportunity better suited to the current team and conditions.

• Determine Venture Viability: With all pre-screening analysis complete, decide whether to continue pursuing this venture opportunity or redirect focus. Establish next steps based on whether to proceed or table work for an alternative direction.

In summary, thoroughly pre-screening an opportunity before fully diving into a new venture allows founders to make well-aligned go/no-go decisions. Assessing alignment across the customer problem scope, viability of potential solutions, competitive marketplace dynamics, and founding team fit provides data-driven insights on whether to proceed or redirect. Outlining required pivots and remaining capability gaps equips teams to establish the following steps: building upon reviewed analysis to continue forward or tabling work to pursue a more viable opportunity. Taking the time upfront to scrutinize all facets of envisioned ventures sets up founders to allocate their valuable time, energy, and resources most efficiently. Conducting robust analysis provides confidence for founders to take decisive action, whether proceeding ahead or redirecting based on evidence-based evaluation of the viability and strategic fit for a startup opportunity within current team capabilities and market conditions.

Conclusion

Thoroughly pre-screening an opportunity before fully committing to a new venture allows founders to make aligned go/no-go decisions. Taking the time upfront to follow this five-step process provides data-driven insights:

1. Frame the Opportunity - Define customer needs and success measures.

2. Screen Early Solutions - Evaluate multiple concepts across feasibility dimensions. 

3. Screen Marketplace - Research competitive landscape and ecosystem partnerships.

4. Screen Founders - Analyze capabilities, motivations, resources, and commitments. 

5. Make Go/No Go Decision - Assess alignment viability across all areas.

This robust upfront analysis informs strategic decisions and grounds founders to allocate resources most efficiently. It accelerates learning when redirection is necessary early on, setting an appropriately scoped venture for the highest probability of success.

In totality, pre-screening venture viability across the opportunity, solutions, market, and founders provides tangible evidence to capitalize on windows of opportunity before inaccuracies inhibit possibilities. Conducting early primary and secondary research closes knowledge gaps when pivoting remains non-disastrous. 

The five-step approach equips founders with targeted data to make evidence-based go/no-go decisions in line with customer needs, solution viability, marketplace dynamics, and team fit.