Capital Mobilisation / SE Development Toolkit Assessment

Social Enterprise Development Toolkit

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TEAM CATEGORY*
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- 1 - Strong founding team - at least 2 people with differentiated skillsets.
- 2 - Team has senior members with live experience of the problem and/or deep un- derstanding of their target customer’s problem.
- 3 - Team has technical ability to build fully functional product and has a clear understanding of the value chain and cost structures in their industry.
- 4 - Team has clear understanding of how their target market operates and has strong industry contacts in this market.
- 5 - Team has clear sales/ops understanding and strategy.
- 6 - Team has proven sales, product dev skills, and management ability to support a growing team for scale.
- 7 - C-suite as good or better than founding CEO and can stay with company through its growth and exit phases.
- 8 - Team is recognized as market leaders in the industry
- 9 - Team positioned to navigate M&A, IPO.
The team has members with good rapport and complementary skills that fit the nature of the business. An example will be a platform product with an analyst in the similar product field and a senior software developer to create the technology.
The team has members that have been in the same or adjacent industry for years and saw or experienced the need to improve the system.
The team understands the cost structures in their industry Software: The team can literally build the product without outsourcing design or development. Hardware: The team can prototype, design, and develop the product and secure a manufacturing partner if necessary.
Both cofounders have worked as executives in our industry for 5+ years. The team can name and have personal connections with, 5 or more key distributors and marketers. To enable screen reader support, press Ctrl+Alt+Z To learn about keyboard shortcuts, press Ctrl+slash
The team can communicate their sales and operational strategy succinctly and effectively. The team can point to other businesses successfully using similar strategies in the industry.
At least one of the team members has: Successfully sold to the team's target customer before, successfully managed a product before or successfully managed a large team before
The executive team is capable of leading the organisation through the coming growth and exit phases. The executive team is committed to staying with the organisation at least until a liquidity event.
The team has received offers to join rival firms or other industry leaders. Industry publications, or other online media, have recognized members of our team as thought leaders in the industry.
One or more of the team members has managed a successful merger, acquisition or IPO before
VIRAL Ⓡ assessment and levels Copyright ©Village Capital 2016-19. All Rights Reserved.

PROBLEM & VISION CATEGORY*
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- 1 - Team has identified a specific, important, and large problem
- 2 - The team can solve the problem and can articulate its vision at scale - what does the world look like if they succeed?
- 3 - The company can articulate why they’re the best ones to solve this problem.
- 4 - The company can articulate system-level change - how this solution would transform the industry.
- 5 - Evidence of impact tied to solution-the company has evidence that by growing the business, company solves the problem.
- 6 - Sales validate impact tied to solution and grow as solution scales.
- 7 - Impact is successfully validated.
- 8 - Systems-Level Change validated.
- 9 - Global leader in stated vision.
The team can clearly articulate the problem they are solving in 30 seconds or less.
This problem has a big impact on their customers’ lives with a large number of people experiencing this problem.
The team is well positioned to execute on their vision and solve this problem.
They can articulate how the lives of their customers will be different if the organisation is successfully scaled.
The team not only has a strong vision but they can also explain how they can deliver a superior value proposition to customers than the vision of competitors.
The team understands where their competitors stand and their roadmaps.
The team's solution will dramatically alter how, when, or where the customers spend their time, effort, or money.
The solution will transform the industry and force competitors and alternatives to adapt or react.
The team has evidence that they are solving the problem for the customers such as:
Customers are spending 50% less money than they did before.
Customers are saving 3 hours per week of their time.
The team is attaining the vision. Early customers are seeing the benefits imagined.
Now it’s time to prove it works beyond the initial target customers.
The team is solidly past early adopters.
They have fulfilled their vision with a moderate group of customers that represent a truly mass market.
The team has hit a scale where the solution is starting to eliminate the problem in their industry.
Continuing rapid growth in demand for the solution validates that this problem is large, important, and that the team's vision for addressing it resonates with their customers and the industry.
VIRAL Ⓡ assessment and levels Copyright ©Village Capital 2016-19. All Rights Reserved.

VALUE PROPOSITION CATEGORY*
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- 1 - Team has identified their hypothesis of their target customer - the specific type of person whose problem they are solving.
- 2 - The team has potential customers who provide evidence that solution solves key pain point - product is a painkiller, not vitamin.
- 3 - Evidence that customers will pay the target price. For B2C - 100 customers, for B2B - 5 customers and conversations with multiple stakeholders in each.
- 4 - Evidence of differentiation through initial target customer feedback that the solution solves their problem significantly better than others in the market.
- 5 - Target customers love the product and want to keep using it.
- 6 - Sales beyond initial target customers. Customers love it and are referring the product to others.
- 7 - Majority of first sales in target market are inbound.
- 8 - Multiple renewals with low sales effort. Customers in multiple markets love the product.
- 9 - Cited as the top solution in the industry solving this problem.
The team can articulate the solution's value proposition to customers.
The team has not yet gathered evidence from potential customers that demonstrates that the solution will be valuable to them.
Structured conversations, surveys, or other data from potential customers demonstrates that the proposed solution could solve their problem.
The data provides initial evidence that the solution solves a key pain point. It is a painkiller, not a vitamin.
Either sales or rigorous testing demonstrates that customers will pay the target price.
B2C: 100+ customers or potential customers
B2B: 5+ customers or potential customers with multiple internal stakeholders in each
Survey data, or other evidence, from actual customers shows that the solution is dramatically better than competitors.
Examples of dramatically better results for your solution include:
80% cost savings over competitors
25 hours saved per user per month
The team's customer satisfaction or Net Promoter Score is very positive and meets or exceeds industry benchmarks.
The customer retention is high and improving.
The team is reaching new customers that are substantively different in demographics or use case from the initial target customers.
The customers love the product and are referring others.
The team's value proposition in the initial target market is so strong that customers find the organisation on their own.
The team is still working to reach the same level of value proposition validation in markets beyond their initial target market.
The team is seeing great renewals or repurchases in multiple markets.
The customer satisfaction, net promoter score, etc. is exceeding the industry average in multiple markets.
Public media and industry experts frequently cite the organisation as one of the best in the industry.
The market share is excellent, or growing rapidly.
VIRAL Ⓡ assessment and levels Copyright ©Village Capital 2016-19. All Rights Reserved.

PRODUCT CATEGORY*
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- 1 - Team has ability to develop low-fidelity prototype and has freedom to operate - not blocked by other patents.
- 2 - Team has a basic low fidelity prototype that solves the problem.
- 3 - Team has built a working prototype and a product roadmap.
- 4 - Team has clear understanding of product development costs and how to build the initial product cost-effectively.
- 5 - Fully functional prototype with completion of product for wide commercial distribution in sight.
- 6 - Complete product with strong user experience feedback.
- 7 - Product is built for scale and additional offerings in progress.
- 8 - Strong customer product feedback in multiple markets.
- 9 - Product recognized as top in industry.
The team doesn’t have any sort of prototype yet. The team has the product and technical skills required to develop a low-fidelity prototype of the product. There are no patent or regulatory obstacles blocking the build of the product.
Team has a prototype that is a rough approximation of what the product will work like. The prototype is not yet fully functional and does not have a market-ready design.
The prototype is fully functional. It may be ugly and only contain core features, but it solves the heart of the problem.
The team has a firm idea of where they want to take the product next. They have made a rough roadmap for testing ideas and seeing if they should build them into features.
The team understands how much it costs to develop the product.
The team knows how to manage the product development process and keep the product development costs down.
The product is beyond the prototype phase. The team is actively testing it in a live environment with a group of paying customers. The team is also confident that they have the resources to launch the product for wide commercial distribution.
The product is sufficiently robust to deliver on core value proposition.
The team has instituted strong customer feedback loops and used customer feedback to make data driven decisions to prioritize customer needs on the product roadmap.
If demand for the product were to grow exponentially over the next 6 months, the team would be able to meet it. The team is testing new ideas for substantial extensions to the product, or for a new product entirely.
The team is able to respond to an influx of customer feedback and support requests from growing customer base.
Software: The product is operating smoothly through a period of exponential or dramatic growth.
Hardware: The manufacturing capacity is keeping pace with rapid growth.
Online reviews, the media, and industry experts routinely cite the organisation as a leader in the industry.
The product is considered to have world class functionality, design, value, or some combination thereof.
VIRAL Ⓡ assessment and levels Copyright ©Village Capital 2016-19. All Rights Reserved.

MARKET CATEGORY*
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- 1 - Team can clearly articulate total addressable market, the percentage they will capture, and initial target market.
- 2 - Team understands any regulatory hurdles to entering the market and has a strategy to overcome them
- 3 - Initial evidence through sales that team can capture initial target market.
- 4 - Evidence of $1B+ total addressable market
- 5 - Team is having conversations with strategic partners to capture their market faster/cheaper than the competition.
- 6 - Supply/distribution partners see their success aligned with the company’s success.
- 7 - Sales cycles meet or exceed industry standard.
- 8 - Brand established. Hard-to-beat partnerships for distribution, marketing, and growth.
- 9 - Clear line-of-sight to industry dominance.
The team can define the industry's total market size and has set a realistic estimation of target market and share to capture.
The team has engaged legal counsel or done extensive research to verify that they understand all regulations that will apply to the business.
They have a legally feasible and financially viable strategy for consistent compliance.
When the team spends money on marketing, or time on sales, they can win customers.
The team can point to public data such as the revenue of publicly traded competitors or reputable research proving the stated total addressable market (TAM) size.
Note: For startup investments, a growing number of investors will be interested in markets around the $100 million threshold, however a large majority cite a $1 billion market as their threshold.
The team is in serious conversations with large potential strategic partners who can help capture the target market faster and cheaper.
If the partners are secured, it will be a game changer. The team will have a direct path to a substantial increase in market share.
The organisation's partners’ interests are aligned with their own for success.
The team has an accurate measure of sales cycle. They have reliable industry benchmarks for sales cycles, and do better
The partnerships are with some of the biggest, or most strategic, partners the team could dream of. No competitor will beat the organisation because they have much better partners.
The organisation's market share is among the largest in the industry and growing.
VIRAL Ⓡ assessment and levels Copyright ©Village Capital 2016-19. All Rights Reserved.

BUSINESS MODEL CATEGORY*
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- 1 - Team has identified an outline of revenue model.
- 2 - Company can point to pricing and business models of similar products in the industry as further evidence that their revenue assumptions hold.
- 3 - Team can articulate projected costs along the value chain and target cost points to reach positive unit economics.
- 4 - Team has financial model with cost and revenue projections articulated and a strategy for hitting these projections.
- 5 - Financial model with evidence of valid projections to reach positive unit economics.
- 6 - Sales begin to map to projections. Evidence of decreasing CAC with growing customer base buying at target price.
- 7 - Business model validated - Validation of strong unit economics.
- 8 - Month-over-month revenue meets industry standard.
- 9 - Minimum 2x revenue growth for multiple years.
The team has an idea of what to charge customers for and pricing. There is a rudimentary spreadsheet model showing this pricing as a major revenue opportunity at scale.
The team can point to similar pricing strategies and business models in the same industry, or an adjacent industry, as evidence that the assumptions in the revenue model and overall revenue projections are credible.
The team has evidence of what it costs to make similar products.
They have a good sense of what cost targets are needed to hit in order to reach positive unit economics.
The revenue and cost projections in the financial model estimates what and how the numbers will change as the company develops and grows over the next 3-5 years.
The team has a plausible strategy for attaining these goals that is backed up with examples of other companies that have succeeded with similar strategies.
The per unit costs and/or revenues are improving and on track to hit positive unit economics.
The team is becoming better at selling, gradually spending less on marketing or sales on a per sale basis.
More of the customers are seeing the value in our product and are now paying a price that is sustainable over the long-term.
The unit economics are positive and contribute to covering fixed costs.
If the team can sustain current sales growth and maintain these unit economics, they will be able to cover their fixed costs and attain profitability.
The organisation's current growth rate, coupled with a strong unit economics, provides clear and compelling evidence that they can hit profitability.
The organisation satisfied current investors with revenue growth. The performance is as good or better than projected.
The team has grown revenue without a disproportionately large growth in costs.

SCALE CATEGORY*
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- 1 - Team has identified multiple possible markets or customer segments and has aspiration to scale.
- 2 - Initial evidence that multiple markets experience this problem.
- 3 - Clear strategy to move to multiple markets.
- 4 - Initial evidence that multiple types of customers find value in the solution or in an extension of the product that the company is well-positioned to develop.
- 5 - Vision and initial evidence of positive unit economics in two markets.
- 6 - Company has cleared regulatory challenges and (if applicable) is implementing a strong IP strategy.
- 7 - Evidence of strong unit economics across multiple markets.
- 8 - Growth of customer base accelerates month-on-month.
- 9 - Strong unit economics for multiple customer segments.
The team aspires to scale the venture to multiple markets or customer segments.
They identified a number of distinct markets or customer segments that they think they can grow into beyond the initial target market.
The team has public or internal data that shows that customers belonging to several different markets or customer segments still experience this problem.
The team has thought through the challenges of scaling beyond the initial target market. They have a strategy to execute the shift and succeed in their next markets.
The team has evidence from testing the product with customers that customers in multiple markets find value in the current product, or in a product extension that the team are well positioned to develop.
In 2 or more markets, the team is very close to making more in revenue on each sale than the variable costs incurred for each sale.
The team has executed on compliance strategy and have resolved any lingering legal issues that were a risk. They have developed a robust strategy for protecting intellectual property.
The organisation may not be profitable, but on a per unit basis, it is making money. It’s just not enough to cover the fixed costs yet.
The team is growing their number of customers faster this month than last month, and it is expected to continue.
Not only are the organisation's unit economics positive in multiple markets, but they are also generating a healthy margin on each sale that is leading towards profitability.

EXIT/ACQUISITION CATEGORY*
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- 1 - Team understands what an exit is and has a vision for how they will ultimately provide a return for their investors.
- 2 - Vision for growth has company solving a large piece of the global problem in 10 years.
- 3 - Initial evidence that the solution already solves the problem better than any incumbents.
- 4 - Evidence of growth trajectory that could lead to IPO, acquisition, or selfliquidating exit.
- 5 - Inbound interest from large strategics.
- 6 - Team has identified specific acquirer(s) or other exit environment.
- 7 - Team has strong relationships with multiple acquirers.
- 8 - Team has turned down acquisition offer.
- 9 - Growth with exit.
The team knows that if they take on investors one day, most of them will want to sell their shares, and the team will need to find buyers either through an acquisition, IPO, etc.
The team has an ambitious but plausible vision for how they can get acquired, IPO, buyout investors, etc.
There are large companies in the team's industry with a history of acquiring promising ventures.
The team is in a new and rapidly growing industry that large corporations are experimenting in but have yet to enter forcefully.
The team knows that it’s an investable market because large reputable companies or numerous venture capital firms are investing millions, if not billions, of dollars in it.
Large companies see the team's traction and are reaching out to see if there is interest in discussing an acquisition.
The organisation is not struggling to get meetings with potential acquirers. They are happy to begin exploring.
The team has identified a handful of specific companies which could plausibly acquire them or they have identified and begun testing the plausibility of a non-acquisition exit strategy.
The team held numerous conversations with several potential acquirers and are on very good terms with them.
They know what revenue and other goals the organisation needs to hit in order to get an offer from them.
The team has received at least one formal acquisition offer so far. It wasn’t quite a fit so the team is holding out for other options.
Close to securing an acquisition or other exit. The organisation expects to achieve it within a few months to a year.

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Social Enterprise Development Toolkit