This document discusses frameworks for entrepreneurs and investors to assess market opportunities. It begins by summarizing four case studies of different companies: ProCom, which was bootstrapped and raised funding but has not exited; Oxiden, which raised funding but failed after 4 years; Darian Holdings, which found success after an acquisition; and Glencoren, which took a long time to raise funding and have products reach the market. It then discusses common points of confusion around market versus industry, macro versus micro factors, and what is truly important about entrepreneurial teams. Finally, it introduces the "Seven Domains of Attractive Opportunities" framework to holistically evaluate opportunities across market, industry, and team factors.

1. © John Mullins 2014
Marston Venture Management:
What happened?
John Mullins
London Business School

2. © John Mullins 2014
ProCom
• Bootstrapped the business with money
from 3Fs to prove the model
• Raised $4 million from GE Capital when
e-learning was all the rage
• Have treaded water since, no exit, but
still around: the “living dead”

3. © John Mullins 2014
Oxiden
• Raised £5 million from 3i
• Took two years to get product to market
• Then, a very lengthy sales cycle
followed
• There was another solution…
• Died after 4 years

4. © John Mullins 2014
Darian Holdings
• Raised small amount of angel money
• An opportunity arose to buy a
competitor at a very attractive price
• Considerable success: ranked among
UK TechTrack 100 for 2005, 2006,
2007, 2008

5. © John Mullins 2014
Glencoren
• Turned down by several investors, but
did eventually raise a small amount for
proof of concept
• Raised the next round in 2006
• A very long lead time play – changing
surgeons’ behavior takes a long time

6. © John Mullins 2014
Research Question
How do entrepreneurs (and
investors, too) best assess market
opportunities?

7. © John Mullins 2014
The Conventional Wisdom
• Three crucial factors for entrepreneurial
success
– Management…
– Management…
– Management!

8. © John Mullins 2014
In the Words of Warren Buffett…
“When a business with a
reputation for poor
fundamentals meets a
management team with a
reputation for brilliance…
it’s the reputation of the
former that remains intact.”

9. © John Mullins 2014
Point of Confusion #1:
The Market / Industry Distinction
• What’s a market?
• What’s an industry?
• These are frequently confused!

10. © John Mullins 2014
The Seven Domains of
Attractive Opportunities
Market Domains Industry Domains
Market Attractiveness Industry Attractiveness

11. © John Mullins 2014
Point of Confusion #2:
The Macro / Micro Distinction
• Large and growing markets are
important, but…
• Structurally attractive industries (in a
five forces sense) are also important,
but…

12. © John Mullins 2014
The Seven Domains of
Attractive Opportunities
Macro
Level
Micro
Level
Market Domains Industry Domains
Market Attractiveness
Target Segment Benefits
and Attractiveness
Industry Attractiveness
Competitive and
Economic Sustainability

13. © John Mullins 2014
Point of Confusion #3:
What’s Crucial about
Entrepreneurs and Their
Teams…
• It’s not found on their CVs
• Not simply about “chemistry” or
“character” or “entrepreneurial drive”

14. © John Mullins 2014
The Seven Domains of
Attractive Opportunities
Macro
Level
Micro
Level
Market Domains Industry Domains
Mission, Ability to
Aspirations, Execute
Propensity on CSFs
for Risk
Connectedness up
and down Value Chain
Team
Domains
Market Attractiveness
Target Segment Benefits
and Attractiveness
Industry Attractiveness
Competitive and
Economic Sustainability

15. © John Mullins 2014
In Summary, for the Seven
Domains…
• Scores are not additive: summing the
scores across the seven domains is
meaningless
• Strong scores at the micro level can
mitigate poor macro-level scores

16. © John Mullins 2014
Why Examine
the Seven Domains?
• Identify key weaknesses
– Questions to be answered
• Suggest avenues for reshaping the
opportunity if not mitigated by other
domains
• Identify key strengths
– Crucial in telling the story to suppliers,
investors, and investment committees

17. © John Mullins 2014
Why Else?
• At first glance, fatally flawed
opportunities can appear attractive
– Observers’ views will diverge
• Thus, evidence is required
– VCs and angels conduct rigorous due
diligence on the opportunities they
consider
– You should, too!

18. © John Mullins 2014
Remember
Warren Buffett’s Words
“When a business with a reputation
for poor fundamentals meets a
management team with a
reputation for brilliance, it’s the
reputation of the former that
remains intact.”

19. To Assess Your Opportunity:
The New Business Road Test
© John Mullins 2014

20. To Gather Your Data, an App,
for Apple and Android!
© John Mullins 2014

21. To Fund Your Opportunity,
Without Investors
© John Mullins 2014

22. © John Mullins 2014
Questions?
jmullins@london.edu
www.getting-to-plan-b.com
www.NewBusinessRoadTest.com
www.CustomerFundedBusiness.com
@John_W_Mullins