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Act Like a Venture Capitalist

by Braintrust2023 | January 2, 2024 | Categories: General,

By Helder Sebastiao

𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞:   We need to ensure we’re investing our limited resources on the most promising projects.

𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧:     Think and act like a venture capitalist.

In other words, treat each project as a startup team seeking funding from you. Startups bootstrap their way to concept validation to secure more funding for development. You should adopt a similar approach – provide “seed funding” to teams for initial quick and relatively inexpensive concept testing, and provide additional rounds of “investment” to teams developing the most promising concepts. Here are the key elements of this approach.

1. Manage projects like an investment portfolio

Venture capitalists manage risk by having a portfolio of investments in various stages of development and at various levels of industry disrupting potential. What does your portfolio look like? Does it align with your growth objectives? Do you have an internal “innovation board” that periodically reviews and assesses your portfolio mix?

2. Expect project teams to adopt relatively simple and cheap rapid experimentation practices to identify and pitch their most promising opportunities

The key benefit of rapid experimentation is to determine the potential attractiveness of an opportunity as cheaply and quickly as possible. One way to instill this mindset is to have regular “pitch competitions” where teams make their case for initial funding. How do you currently generate opportunities?

3. Match metrics to stage of development

Pitching / business case presentations should be a requirement for project teams to secure additional rounds of investment. With each round of investment the performance metrics should become more refined / specific. In the early rounds relatively simply metrics (e.g., number of people clicking for more information) suffice, but eventually teams will need to demonstrate a substantial market size and demand. Do you currently match metrics to the stage of development?

4. Continually assess, cull, and nurture

Portfolio management is a continuous process of assessing current “investments,” culling those that do not meet performance thresholds or fit in the desired portfolio mix, and further nurturing those that do. This typically entails a weekly, monthly, or quarterly review of individual projects, and a quarterly or annual review of the overall innovation portfolio. Some companies include outside experts on their internal “innovation board” who provide both expertise in managing the process as well as a fresh perspective on the projects in the pipeline. Does your company have a similar process for reviewing and making decisions on projects?

To learn more about how to apply these concepts in your company, particularly in developing and implementing the innovation portfolio management practices mentioned here, please contact us. We can help Let’s talk.

#entrepreneurship #venturecapital #productmanagement #innovationexecutive #innovation #lanesofperspectives #lodestoneinnovation  #portfoliomanagement

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