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TOOL INVESTMENT READINESS LEVEL

The Investment Readiness Level was created by Steve Blank

With the Investment Readiness Level, you now have a way to quantify the progress of a product, project, or company help you make investment decisions, whether you’re a team leader, manager, or investor.

Check out steveblank.com and Steve Blank’s blog posts for more background information on the Investment Readiness Level.

CATEGORIZE YOUR IDEAS

Where is the project, product, or company in its lifecycle?

Like all of the tools in this book, the IRL is designed to allow for a rich, strategic conversation, in this case, using a common set of metrics – related to the business model of the project, product, or company in question – as the basis for the conversation.

WHAT IS MY NEXT STEP?

The IRL is also a prescriptive tool. Regardless of where your project, product, or company is in the design process, the next milestone is immediately clear.

Many project leads, product managers, and entrepreneurs only care about launching the next product or giving a great presentation or demo. When employing the design process, however, they should be focused on maximizing learning.

How many interviews, iterations, pivots, restarts, experiments, and minimal viable products did they go through? What did they learn from that? And how did that influence their decisions? What is the evidence backing up their next step?

Whether they’re giving project updates or presentations to investors using the IRL, the focus should be on how they gathered evidence and how it impacted their understanding of the underlying business models.

LESSONS LEARNED

The Investment Readiness Level provides a “how are we doing” set of metrics.

It also creates a common language and metrics that investors, corporate innovation groups, and entrepreneurs can share.

It’s flexible enough to be modified for industry-specific business models.

It’s part of a much larger suite of tools for those who manage corporate innovation, accelerators, and incubators.

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DOWNLOAD Download the Investment Readiness Level Canvas from www.designabetterbusiness.com

CHECKLIST

You’ve defined your Investment Readiness Level.

You continue to come back and refine your Investment Readiness Level.

NEXT STEP

Think what you need to do to reach the next level.

Find an investor.

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EXAMPLE INVESTMENT READINESS LEVEL

SO, YOU HAVE AN IDEA . . .

When you’re starting out with nothing but an idea, you can use the Investment Readiness Level to track your progress. Or, if you already have an established startup, use it to figure out what to do next. Prepare yourself for a bumpy ride!

LEVEL 1 & 2: MAKE YOUR ASSUMPTIONS CLEAR

Start with your point of view. Fill out your Business Model Canvas and Value Proposition Canvas. Define your vision and your design criteria. All of these will be full of assumptions. Try to figure out which are the riskiest assumptions using the Riskiest Assumption Finder (page 200). Make your assumptions clear!

LEVEL 3 & 4: FIND THE PROBLEM-SOLUTION FIT

Check if the problem exists by interviewing potential customers. Try to really understand their needs.

Prototype a minimum viable product, one with just enough features (a rough representation) to gather validated findings (wow yourself with customer insights).

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LEVEL 5 & 6: VALIDATE THE RIGHT SIDE

Validate the right side of your Business Model Canvas. Validate the product market fit via a minimum viable product. Validate your value proposition, customer segment, channel, and relationship with experiments, constantly testing your next riskiest assumption.

LEVEL 7 & 8: VALIDATE THE LEFT SIDE

Finally, it’s time to develop a high-fidelity minimum viable product which is quite close to the final product. We now need to validate the left side of the Business Model Canvas: can you actually realize, operationalize, and deliver the value you promise?

Validate key resources, key activities, and costs, and do partner due diligence to make sure you’re working with the right partners.

LEVEL 9: METRICS THAT MATTER

Define the relevant metrics for your startup and your industry to be successful or investment ready. The right metrics are the ones that show you if you are on the right track, as opposed to “vanity metrics” that give a false sense of security. Find the metrics that correlate the strongest with the growth of your business and help you scale!