I’ve just started attending classes by the Mobile Academy, a great joint initiative by University College London (UCL) and Mobile Monday London. The first class that I attended was run by Ian Merricks, a seasoned investor and Managing Partner at White Horse Capital.
It was interesting to hear Ian’s thoughts on the importance of proving an idea, explaining that – particularly in the UK – VC investors are not interested in just funding an idea; they want to see proof. He therefore spent a good amount of time talking about things to think through before you prepare your business case:
- Vision – Your vision will differentiate you, it will set you apart from everybody else. Your business case will provide credibility, but the underlying vision needs to be clear and convincing (see Fig. 1 below).
- Market – Here, Ian talked about being clear about the problems that you are looking to solve and being able to back up your market assumptions with numbers. Make sure you’re specific on your target numbers, the size of the market, route to market, best price point and being able to translate this into concrete numbers. Also, understand where the market is going and identify (potential) barriers to entry (for you and your competitors).
- Research – Consider the following areas of research: (1) market (see the previous point) (2) commercial (talking to clients, being able to attest your assumptions based on actual user research and feedback) and (3) product (see Fig. 2 below). Ian stressed the importance of doing thorough research, explaining that the better you know your market and your customers, the higher the chance of success. He again brought it back to the numbers in a spreadsheet which you can then explain and provide sound underlying arguments for.
- Validation – Demonstrate how you will be able to generate revenue. Ian talked about the importance of actual (third party) validation of revenue now and in the future (provide proof), the “how” and route to market as well as price competition. Are people already using your product? If so, how many and why? These are some of the questions that Ian raised in his class.
- Cost base – Ian talked about the cost base to underpin the numbers in your business case (see Fig. 3 below). Ian seemed to be all about creating a ‘minimum commercially viable’ product and reflecting this commercial viability in your business case numbers.
- Test case – Ian then did an exercise with one attendee, where he took a spreadsheet and started inputting some key assumptions and metrics. It was great to see a live example of someone being asked challenging questions around things such as user assumptions and go-to-market approach.
Main learning point: Even though I felt that I knew about most of the things that Ian talked about, purely having put together a few business cases in the past, it was still good to hear about the key things to focus on when creating a business on. It was particularly interesting to see a live ‘demonstration’ where Ian asked some of the questions which underpin a business case to an aspiring entrepreneur.
Fig. 1 – Key things to think about before putting numbers in the business case – Taken from: Ian Merrick’s talk about “Constructing your business case” at The Mobile Academy on 9 October 2014
- What sets you apart
- Could “anyone” do what you do?
- What is your motivation?
- How will you succeed?
- Simple clear message
- USP / Differentiation
- Management / Vision
Fig. 2 – Research to do as part of constructing a business case – Taken from: Ian Merrick’s talk about “Constructing your business case” at The Mobile Academy on 9 October 2014
Develop a solution and then research the available (possible) market(s)
Research a market and identify a gap which you develop a solution for?
- Market creation – Truly unique solutions can be a problem
- Price / demand curve
- Target customer knowledge
- Route to market
- Fit for market
- Supporting requirements (training, technical support)
- Product roadmap
- Minimum viable product -> Minimum Commercially Viable Product
Fig. 3 – Outlining the cost base of your product or service – Taken from: Ian Merrick’s talk about “Constructing your business case” at The Mobile Academy on 9 October 2014
- Fixed / Variable costs
- Testing assumptions
- Dynamic forecasting -> the financial equivalent of “pivoting”: changing assumptions and direction