De-Risking and
                           Acceleration


                       Steve Barsh, Managing Partner
            ...
Agenda


                       •   DreamIt Ventures

                       •   De-risking & discovery

                 ...
Help great people
                             with great ideas
                          build great companies
          ...
Entrepreneurs Receive



                        Mentoring                  Professional Services
                      Ex...
Premises & Observations


•   Money too early
•   Validation from investors
•   Key risks
•   Out-of-box techniques
•   De...
3 – 7 Key Assumptions




                          6
Dreamitventures.com           Copyright © 2008-2009 by DreamIt Ventu...
De-Risking Goals

•     Convert assumptions into
      knowledge
    •   At lowest cost
    •   As quickly as possible
•  ...
Common Assumptions

     Positioning / dierentiation
     Demand
     Market size
     Feature set
     Competition
     P...
Common Problems

                                                  Key assumptions not
                                   ...
Stop Waving, Start Pointing!




Dreamitventures.com
                      10   Copyright © 2008-2009 by DreamIt Ventures ...
100% Sure?

•     Plans
•     Presentations
•     Pitches
•     Financial models
•     Forecasts
•     Estimates
•     Thi...
Experiment



                               •     Hypotheses
                               •     Prove or Disprove
     ...
Key Investment Questions


•     Key assumptions, dependencies,
      and timetable?

•     Evidence we are looking for?

...
3 Main Takeaways



                                  1. Key assumptions
                                  2. Experiments
...
More Info


                      •   Redeye VC Blog: Failing Cheaper by Josh
                          Kopelman, First Ro...
Agenda


                       •   DreamIt Ventures

                       •   De-risking  discovery

                  ...
De-Risking and
                            Acceleration

                       Steve Barsh, Managing Partner
            ...
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Steve Barsh Of Dream It Ventures On De Risking For Wharton Entrepreneurship Club February 2009

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Presentation given by Steve Barsh of DreamIt Ventures for the Wharton Entrepreneurship Club February 2009 on techniques for identifying key assumptions and de-risking them early in a capital-efficient manner to lower risks and increase value.

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Steve Barsh Of Dream It Ventures On De Risking For Wharton Entrepreneurship Club February 2009

  1. 1. De-Risking and Acceleration Steve Barsh, Managing Partner steveb@dreamitventures.com * 215.888.2101 dreamitventures.com barshbits.com sbarsh 1 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  2. 2. Agenda • DreamIt Ventures • De-risking & discovery • Q&A 2 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  3. 3. Help great people with great ideas build great companies • 3 month Startup Accelerator • Pre-Seed investment • Expertise • Mentorship 3 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  4. 4. Entrepreneurs Receive Mentoring Professional Services Expert Speakers Team Members Community Software + Resources Capital 4 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  5. 5. Premises & Observations • Money too early • Validation from investors • Key risks • Out-of-box techniques • De-risk before • Pitching • Building the product 5 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  6. 6. 3 – 7 Key Assumptions 6 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  7. 7. De-Risking Goals • Convert assumptions into knowledge • At lowest cost • As quickly as possible • Decrease assumptions to increase value • Consume intellectual capital before significant outside capital • Succeed or fail quickly 7 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  8. 8. Common Assumptions Positioning / dierentiation Demand Market size Feature set Competition Pricing / business model Sales / adoption cycle Team Product development Execution Marketing Financials forecasts Financial needs Enterprise value Dreamitventures.com 8 Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  9. 9. Common Problems Key assumptions not captured and no time table Little discussion with potential customers Little primary research Weak demand Pricing a guess Marketing field of dreams Strategy alignment Dreamitventures.com 9 Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  10. 10. Stop Waving, Start Pointing! Dreamitventures.com 10 Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  11. 11. 100% Sure? • Plans • Presentations • Pitches • Financial models • Forecasts • Estimates • Things with numbers or graphs Dreamitventures.com 11 Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  12. 12. Experiment • Hypotheses • Prove or Disprove • Build -- Release, measure, learn, iterate • Research • Valid proxies 12 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  13. 13. Key Investment Questions • Key assumptions, dependencies, and timetable? • Evidence we are looking for? • Assumptions de-risked before further investment? • Success criteria (e.g., market uptake; revenue; impact, financials, etc.)? Dreamitventures.com 13 Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  14. 14. 3 Main Takeaways 1. Key assumptions 2. Experiments 3. Convert assumptions into knowledge 14 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  15. 15. More Info • Redeye VC Blog: Failing Cheaper by Josh Kopelman, First Round Capital. • Common Mistakes Made by Entrepreneurs by Mark Henricks. • How To: Raise Money in a Down Economy by Eric Ries at KPCB. • Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity (March 2009) by Rita McGrath and Ian MacMillan (Wharton) 15 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  16. 16. Agenda • DreamIt Ventures • De-risking discovery • QA 16 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.
  17. 17. De-Risking and Acceleration Steve Barsh, Managing Partner steveb@dreamitventures.com * 215.888.2101 dreamitventures.com barshbits.com sbarsh Supporters 17 Dreamitventures.com Copyright © 2008-2009 by DreamIt Ventures LLC. All Rights Reserved.

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