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Opportunity Evaluation

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It is helpful to think of the evaluation step as continually asking the question of whether the opportunity is worth investing in. You are actually constructing and then continually revising an "investment prospectus."
There are five basic questions that you should ask as you evaluate an opportunity.

1.    Is there a market opportunity?
•    Hypothesis: market problem and potential customers
•    Evidence and detail
•    Preliminary sizing
2.    Is there a feasible solution?
•    Parameters of acceptable solution
•    Proposed solution
•    Technical feasibility
3.    Is there a basis for sustainable competitive advantage? (Is there a “winner-take-all” first mover scenario?)
•    Hypothesis of competitive advantage and value
•    Uniqueness and protection
•    Likely responses
4.    Can a team be assembled that can execute a commercialization plan?
•    What skills, experiences, relationships are required to launch the venture successfully?
•    How can the necessary team be assembled?
5.    Is the risk / reward profile sufficiently attractive to merit investment of capital?
•    Describe 3 – 4 scenarios: assumptions & projected financial performance
•    What is the likelihood of the various scenarios and what is the basis for these judgments?

If you can answer all of these questions affirmatively, then you have persuaded yourself that this opportunity is worth investing in. This is the first step toward being able to convince others, whether they be prospective customers, employees, partners or providers of capital.

The considerations in this discussion are generic in the sense that they are meant to apply regardless of the industry of focus. while high level principles apply across all industries, it is certainly debatable whether a methodology can be created that applies equally to all industries. To address some concerns in this area, we have added some thoughts about some specific industries and important differences between them.