[Description]

Evaluate level of competition among competitors and substitutes offering similar products and services within start-up's target market.

[Implication]

Competitors and substitutes in target market influences the differentiation in value proposition, pricing, market share, and profitability. Analyzing competitors and substitutes allows for an indirect confirmation of the Product-Market Fit of similar products and services, reducing Trial-Error Stage efficiently. Furthermore, positioning analysis within target market helps to identify unique value proposition or niche markets targeted for specific customer segmentation.

[Description]

Evaluate level of market entry barriers due to government laws and regulations or market structural factors within start-up's target market.

* Government laws and regulations: licenses, approvals, registrations, reporting, etc.
* Market structural factors: brand loyalty, technology monopolies, initial capital requirements, etc.

[Implication]

Business viability and feasibility in target market can be affected by government regulatory requirements and market structural factors. For early-stage start-ups, it is crucial to analyze entry barriers assessing risks of market entry and possibility of market penetration before developing products and services. By doing this, start-ups can timely adjust or pivot development of product or service or even target industry and country setting a target market with relatively higher chances of success given limited resources.

[Description]

Evaluate level of dependency on changes in political, economic, social, and technological external environment within start-up's target market.

* Political: government regimes, policies, relevant laws or regulations, etc.
* Economic: income levels and distribution, interest rates, inflation, etc.
* Social: demographic structure and distribution, social perceptions or preferences, etc.
* Technological: technological innovation and advancement, technology lifecycle, etc.

[Implication]

High dependency on changes in external environment can significantly impact sustainability or growth potential. When government policies that have been favorable to business take a drastic turn due to change in administration, overall business model may need adjustments posing significant risks. Monitoring potential impact of changes in external environment and establishing timely response strategies can mitigate risks related to business sustainability and growth potential.

[Description]

Evaluate size and growth rate of Serviceable Obtainable Market (SOM), Serviceable Available Market (SAM), and Total Addressable Market (TAM) in respect to start-up's products and services.

* Total Addressable Market(TAM): Total revenue opportunity of business sector or industry that product and service can theoretically enter
* Serviceable Available Market(SAM): Portion of TAM realistically reachable and serviceable by product and service and applicable to business model
* Serviceable Obtainable Market(SOM): Portion of SAM actually capturable within short period by launching product and service

[Implication]

Market size and growth rates of Total Addressable Market (TAM) and Serviceable Available Market (SAM) are key factor for start-up to assess opportunities and growth potential of the target market. Detailed customer segmentation and revenue estimation of Serviceable Obtainable Market (SOM) targeting to capture when initial market entry is key factor for realistic short-term revenue projection and efficient resource allocation.

[Description]

Evaluate specific target revenue size of start-up's products and services within a year after entering Serviceable Obtainable Market(SOM).

[Implication]

Immediate Acquisition Market (IAM) can be estimated using top-down approach based on market size and obtainable market share as well as bottom-up approach based on expected sales price and quantity of product and service. Expected sales volume to achieve expected revenue can serve as foundational information for detailed financial strategy including expected production volume and cost of goods sold.

[Description]

Evaluate whether start-up's products and services provide practical solution to existing problem faced by target customers and propose unique value compared to competitors.

[Implication]

Customer-Problem Fit regarding depth and scope of problems faced by target customer segments and Problem-Solution Fit regarding practical and unique solutions to those problems should be verified before entering into market. These verifications help to identify specifics of problems and solutions adequate to target customer segments allowing for efficient and effective adjustments or pivots of pre-defined target customer segments, problems, or solutions.

[Description]

Evaluate Go-to-Market strategy including scope of product and service, marketing, distribution, and sales strategies for market entry as well as Key Performance Indicators(KPIs) defined to monitor.

* Examples of KPIs
1. Acquisition: number of website or application visitors, etc.
2. Activation: number of users who sign up or register for product or service, etc
3. Retention: number of users who continue using product or service over time, etc.
4. Referral: number of users who recommend product or service to others, etc.
5. Revenue: revenue generated per customer, etc.

[Implication]

Early-stage start-ups can benefit from releasing a Minimum Viable Product (MVP) with essential core elements to promptly gauge market reactions and demand. Market feedback can be utilized for efficient adjustments in product or service development, marketing, distribution, and sales strategies to achieve Product-Market Fit. Furthermore, Key Performance Indicators (KPIs) defined to monitor market entry can also be utilized to monitor scale-up strategy in respect to product and service or market expansion.

[Description]

Evaluate scale-up strategy including specific business milestones for start-up's growth and expansion as well as Objective and Key Result(OKR) indicators defined to monitor.

* Objective and Key Result(OKR) indicators: management system for setting and tracking clear objectives and defining key results as indicators to measure them
(Objective Examples: product and service enhancement, operational and cost efficiency, marketing and sales expansion, customer and revenue expansion, etc.)

[Implication]

Detailed scale-up strategy is key factor for growth of business and valuation. In order to achieve long-term goals, various preliminary steps as detailed business milestones needs to be set and achieved. Furthermore, monitoring indicators for these business milestones allow for clear management of business direction and progress. For early-stage start-ups, overall growth management is vital alongside performance metrics related to customers and revenue.

[Description]

Evaluate strategies to secure and maintain categories of key resources necessary for start-up's business.

* Key resources: technology, skilled personnel, supply and distribution networks, intellectual property rights, physical assets, etc.

[Implication]

Essential key resources are necessary for business operation and growth depending on business sector. Strategies to timely secure and maintain these resources are necessary throughout business life-cycle helping start-up alleviate initial constraints or bottlenecks and establish foundation for stable sustainability and rapid growth.

[Description]

Evaluate specific revenue models including target audience, pricing strategy, and payment methods associated with start-up's products and services.

[Implication]

Revenue model specifically outlines what product and service are offered to whom in return for how much by what method and when it is billed and collected to generate revenue. Detailed revenue model allows setting adequate price considering market prices and cost of goods sold, defining suitable payment methods and timing based on business processes and cash flow, and allocating resources efficiently to maximize revenue stream based on various revenue sources securable in line with scale-up strategy.

[Description]

Evaluate the estimated revenue scale based on Top-down methods relative to market share in the startup's target market size and Bottom-up methods based on sales prices and quantities.

[Implication]

Top-down revenue projection can be used to define macro-strategic directions based on target market size and start-up positioning. Bottom-up revenue projection helps in developing sales strategy and production plans based on sales prices and quantities. Concrete revenue projection along with cost of goods sold and expenses helps to develop stable financial plan including estimation of break-even points and cash runway.

[Description]

Evaluate costs of goods sold directly related to manufacturing or producing products and services contributing to revenue.

* Cost of goods sold(COGS): material costs including raw materials or inventory purchases, direct labor costs related to manufacturing and production, electricity or repair costs related to manufacturing and production expenses, etc.

[Implication]

Understanding cost items and amount required for manufacturing or producing products and services through cost of goods sold can help optimization of resource allocation and cost reduction. Furthermore, analyzing appropriate sales prices relative to costs can support securing profitability.

[Description]

Evaluate annual fixed costs and contribution margin calculated by excluding variable costs from revenue.

* Variable costs: costs incurred depending on sales or production quantities
* Fixed costs: costs incurred regardless of sales or production quantities (generally items that cannot be changed within a one-year period)

[Implication]

Expected sales volume and contribution margin derived by subtracting variable costs from sale price of unit products and services must exceed total fixed costs to achieve profit. Concrete variable and fixed costs analysis along with revenue projection helps in developing stable financial plan including estimation of break-even points and cash runway. Early-stage start-ups must be cautious of increasing level of fixed cost such as labor cost without stable revenue or flexibility of fixed cost.

[Description]

Evaluate operating income calculated by excluding selling and administrative expenses from gross profit excluding cost of goods sold from revenue.

* Selling and administrative expenses(SG&A): labor costs, taxes and various fees, depreciation expenses, advertising and promotion expenses, etc.

[Implication]

Sales revenue must exceed cost of goods sold and selling and administrative expenses to achieve operating profit. Although operating profit is generally not expected in early stages, SG&A must be managed at appropriate levels considering cash runway. Concrete SG&A analysis along with revenue projection and cost of goods sold helps in developing stable financial plan including estimation of break-even points.

[Description]

Evaluate Cash Burn Rateand Cash Runwayof start-up.

* Cash Burn Rate: monthly cash consumption rate combining cash inflows and outflows
* Cash Runway: number of months until all cash reserves are exhausted

[Implication]

Concrete cash flow analysis allows predicting when available funds will be exhausted enabling preemptive planning and preparation including cost reduction or fund raising. Unlike accrual based accounting standards, managing liquidity of actual cash inflows and outflows can significantly impact sustainability of start-up.

[Description]

Evaluate start-up founder's industry expertise related to products and services, business operational capabilities, entrepreneurial background and vision.

[Implication]

Founder's capabilities underpin start-up's vision and goals leading team and business to overcome challenges due to lack of personnel and systems in early stage fostering sustainability and growth.

[Description]

Evaluate team member with business planning and execution capability within start-up based on similar work experiences and academic expertise.

* Planning and execution capability: develop business strategy, manage key stakeholders, create deals and sales, etc.

[Implication]

Planning and operational capabilities involve understanding customer value needs, planning products and services, building relationships with business partners and investors, and securing resources necessary for growth, providing strategic vision and execution for the start-up's market presence and financial sustainability.

[Description]

Evaluate team member with technical capability within start-up based on similar work experiences and academic expertise.

* Technical capability: develop and manage products and services, analyze data, solve technical issues, etc.

[Implication]

Technical capabilities are vital for developing and managing products and services according to business model, ensuring secure and scalable expansion aligned with scale-up strategies. Expected benefits including quality and timely action of technical support versus labor cost depending on internal or external hiring should be considered for team composition.

[Description]

Evaluate team member with marketing and branding capability within start-up based on similar work experiences or academic expertise.

* Marketing and branding capability: products/services and UI/UX design and branding, customer marketing and communications, etc.

[Implication]

Start-up needs to establish marketing and branding strategies based on start-up's vision and value proposition, positioning start-up appropriately for target market and customer segments. Designing products and services as well as user experience contribute to revenue, but establishing corporate identity among customers is essential for loyalty-based competitive advantage and valuation growth.

[Description]

Evaluate whether start-up completed in hiring necessary personnel as well as building teamwork based on their work experience together.

[Implication]

Effective team building in start-up involves setting and sharing goals among team members, fostering open and effective communication and collaboration, and creating a positive team culture which leads to start-up's performance and success. Prioritizing tasks and identifying necessary human resources for current and future business enables efficient work distribution and effective performance within limited capital and future funding plans.

[Description]

Evaluate history of start-up's fund raising including government support projects, technology based financing, and fundings from private investors.

[Implication]

Funding histories from government, technology-based guarantee agencies, or private investors indirectly signals validity of start-up's business and growth potential gaining interest and trust from follow-up investors and partners.

[Description]

Evaluate fund raising plans including purpose, timeline, amount and method based on scale-up strategy and financial planning as well as expected changes in ownership structure.

[Implication]

Concrete funding raising plan instills trust in investors about start-up's growth potential and investment value which increasing possibility in timely securing necessary funds. Systematic capitalization table aids in strategic planning and decision-making including desired investment amounts and ownership dilution throughout stages of fund raising.

[Description]

Evaluate level of government support and private investment activity within start-up's business sector.

[Implication]

Government support and private investments are vital for early-stage start-ups to overcome the "Death Valley" and achieve rapid scale-up. Possibility and accessibility of fund raising increases within business sector where government support programs and private investments are comparatively active.

[Description]

Evaluate potential for future valuation growth based on quantitative and qualitative information according to scale-up strategy of start-up.

[Implication]

Valuation of early-stage start-up is based on limited quantitative and reliable information along with qualitative and subjective factors including investor sentiment, market conditions, and negotiation strategies. Scale-up strategy encompassing both financial and non-financial information provides reasonable basis for target valuation at future investment stages and serves as a foundation for attracting investment.

[Description]

Evaluate possibility of exit including expected timeline and methods for future investment recovery based on scale-up strategy and fund raising plan.

[Implication]

For early-stage start-ups, setting ultimate goal as mergers and acquisitions(M&A) or initial public offerings (IPO) is important, but addressing uncertainty of investment recovery for early-stage investors through secondary sales via follow-up investments and presenting possible methods and timelines for investment recovery offers significant advantages in securing both initial and follow-up investments.