Startup Opportunities, 2nd Edition

CHAPTER 4Approaches to Opportunity Evaluation

There are almost as many approaches to opportunity evaluation as there are opportunities. However, most approaches fall into one of two categories: (1) a stage-gate process or (2) a feedback-loop-based approach involving agile decision making.

A stage-gate process has a series of stages—typically discovery, scoping, building the business case, development, testing, and launch. Between each stage is a “gate” that prompts a review and a decision about whether to go to the next stage, do more evaluation, or kill the project.

The feedback loop process follows a build, measure, and learn approach that is based on the belief that you can only get the information you need by beginning to build what you think your customers want.

The stage-gate process often produces a business plan that asks the question “Is this opportunity worth pursuing?” while the feedback loop process produces something in the form of a business model canvas and asks the question “What assumptions would have to be true for this to be an opportunity worth pursuing?”

Where Does Opportunity Evaluation Fit into the Overall Startup Process?

Most attempts to model the entrepreneurial process include opportunity evaluation as a key stage in the creation of a new venture. The cliché “look before you leap” applies, and evaluating an opportunity before investing time, energy, and money is the best way to do that.

The Duke Center for Entrepreneurship and Innovation suggests ...