Business Model Evaluation

Imagine you are a venture capital investor who considers investing into a start up.

In terms of due diligence there is not much to analyse except a team and an idea expressed in a business plan.
What method would you use to evaluate the business model if you don't want to rely on your gut feeling alone?

Here's what I've found so far:

1) Business Model Generation (2010): 
Two-fold evaluation: SWOT for Canvas as big picture and SWOT for each single component.

2) Morris, Schindehutte, Richardson, Allen (2006):
7 performance indicators: uniqueness, profit potential, internal consistency, imitability, robustness, adaptability, sustainability.
That's great so far, however unclear how to operationalise this. There seems to be no method how to actually measure this.

3) Amit, Zott (2001):
4 performance indicators in their NICE-framework: novelty, lock-in, complementarity, efficiency. 

4) Hamel (2000):
4 performance indicators: efficiency, uniqueness, fit, profit boosters.


Which ones do you find useful and have you come across other approaches that can be operationalised and are therefore useful for practitioners?


Regards,
david

Tags: VC, assessment, capital, due, evaluation, indicators, investment, investors, performance, venture

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Replies to This Discussion

Permalink Reply by David M. Weiss on February 14, 2011 at 12:29am

Rod, the Business Model Evaluation Tool (Excel) is ready and uploaded on

http://www.businessmodelhub.com/forum/topics/business-model-evaluat...

 

Regards, David

Permalink Reply by Philippe Meyer on October 19, 2011 at 4:25pm

Hi Rod, Hi All,

I have just joined - happy to be here. Being an entrepreneur myself and having successfully raised round one capital i've actually been on the other side of the table. What I appreciate in Rod's global value chain is that it incorporates an extremely important factor that is so often glossed over and that is the core competencies and drive of the team. Evaluating an idea quantitatively is fine but without a team behind it to execute the proposed model - its just a few lines on a page.. You're probably all thinking "that goes without saying" but i think it's probably one of the most important factors for a VC to look for in any project.

Philippe.  

Permalink Reply by Paul Anderson on December 21, 2010 at 2:15pm

Hi David,

Kees van der Heijden coined a term the 'business idea' back in 96 to which I expanded and completed research back in 2000. I have attached an article which explains my approach. It incorporated +ve & -ve driving forces, both internal & external which if articulated, add greater rigor in assessing your client's CVP, competencies, CA, & overall commercial uniqueness.

Cheers

Paul Anderson

Permalink Reply by David M. Weiss on January 24, 2011 at 11:33pm

Paul, thanks for the document. Can you upload it again - unfortunately I cannot open it.

Cheers, David

Permalink Reply by Paul Anderson on January 24, 2011 at 11:45pm

Hi david,

Hope this works

Attachments:
Permalink Reply by David M. Weiss on January 25, 2011 at 12:02am

for some reason I still get a page that looks like this:

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Permalink Reply by Hans Le Fever on February 2, 2011 at 6:11pm
Also to me, but found that it might have something to do with Adobe plug-in of the browser. Downloading as file to the desktop and then opening with double click worked well for me.
Permalink Reply by Andres Urrego on January 18, 2011 at 3:41pm

To a start up operation, i think that must important is evaluate the bussines model enviroment

Permalink Reply by David M. Weiss on January 27, 2011 at 1:37pm

Andres, my results are out: http://www.businessmodelhub.com/forum/topics/business-model-evaluat...

It it of use to you? David

By the way I had to focus on the BM itself and exclude environment and execution to that aim. However I agree that's important and I know of research that focusses specifically on that.
Permalink Reply by David M. Weiss on February 14, 2011 at 12:29am

Andres, the Business Model Evaluation Tool (Excel) is ready and uploaded on

http://www.businessmodelhub.com/forum/topics/business-model-evaluat...

 

Regards, David

Permalink Reply by Georg E. A. Stampfl on April 4, 2011 at 8:18pm
Andres, I fully agree with you! I am currently working on a research paper which takes a first step in conceptualizing the business model environment. Thinking about what comprises a business model's environment is for me the first step of evaluating it. I will report on this research here on the hub soon.
Permalink Reply by David M. Weiss on January 24, 2011 at 11:56pm

 

This link will take you to the results of a study with a venture capital investment fund on how to evaluate business models.

The canvas is part of the method.

 

http://www.businessmodelhub.com/forum/topics/business-model-evaluat...

 

 

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