VEM Flashcards
What is the VEM and why is it useful?
Venture Evaluation Matrix, a framework that analyses and helps to assess business opportunities. It has various sections with scores, and questions to which scores are assigned in each section.
Risk is an important factor, this tool helps to rationalise the “gut feeling” about the opportunity.
What are the Key Actors of the VEM?
Customer = demand Company = supply Entrepreneur = bring demand and supply together
What are they Key Perspectives of the VEM?
Value proposition = micro
Industry = macro
Strategy = dynamic perspective
What are the cells of the VEM ?
Need, Solution, Team
Market, Competition, Network
Sales, Production, Organisation
What does the Need cell assess?
What is the customer need?
How strong and recognised is it?
How much is the customer able and willing to pay?
What does the Solution cell assess?
Does the solution solve the problem?
How does the solution compares to alternatives?
To what extent can the innovation be protected?
1. IP
2. Lead time and trade secrets
What are the four main principles of design thinking?
- Human-centric approach
- Openness to ambiguity and experimentation
- Iterate, re-design
- Make it tangible to communicate it
What des the Team cell assess?
Do founders have the required skills? (serial entrepreneurs usually have higher rates of success and ability to time the market)
What are the motivation and commitment? Are they sufficient?
Is the founder’s team complementary and cohesive? (solo founders could give a negative signal)
What does the Market cell assess?
How Large is the target market? (segment, Total Available Market TAM, Service Available Market SAM)
How fast will target market grow? (S curve, adoption)
How will adoption take place? Network externalities
What does the Competition cell assess?
Who are the current and future competitors? (established companies and startups, Role of established companies)
What is the nature of the competition? (barriers to entry, extent of differentiation, scrutiny of regulator)
How can the venture differentiate itself?
product, customer segment.
Exploit core rigidities of incumbents.
Competition or cooperation with incumbents.
What does the Network cell assess?
Importance of network centrality.
What is the founder’s team reputation?
What networks do they have access to?
How does the team forge and maintain relationships?
What does the Sale cell assess?
How does the venture reach its customers?
What are the marketing and distribution strategies? (direct or indirect sale, customer lock in)
What are the pricing strategy and revenue model? (Who should or shouldn’t pay, incentives, how may customers try to obtain the same good for less).
What does the Production cell assess?
What is the development strategy?
What is the scope of activities and the partnering strategy?
What the company plans to do, what to outsource.
What is the cost model? How efficient are Operations? Importance of technical milestones.
What does the Organisation cell assess?
How will the founder team expand and evolve?
Approach to leadership, what is missing in the current founder team. How to make the best use of the talent within the current team.
What is the governance structure? Formal and informal control, board of directors.
What is the talent strategy?
How does the company plan to attract, nurture and retain talent.
Culture is mostly formed at the early stages of the venture.
How can we interpret the VEM?
Three rows = Attractiveness.
Value = potential value of the opportunity.
Industry = potential scale of the opportunity.
Strategy = growth potential.
Three columns = potential competitive advantage.
Customer = access to customers.
Company = barriers to entry.
Team = Competencies
