Five Things We Look For When Evaluating Startup Solutions

There's nothing we love more than spotting promising new technologies and startups for our corporate partners. Our team possesses over a decade of startup scouting and evaluation experience and below are five areas we consider when determining whether or not a startup is worthy of an introduction to our clients and corporate council members.

At King Street Ventures , we say that when you win the experience, you win the consumer. Therefore, we look for solutions that would create competitive advantage by enhancing the customer experience. Novelty and newness aren't always a good thing, but achieving first-mover advantage can translate into competitive advantage if it enables a brand to engage its consumers in new and exciting ways.?

Questions to ask:

• Is this solution something our customers would be excited about?
• Does this solution fit into our customer’s experience with our brand?
• Would we benefit from being early (or first) to market with this solution?

When millions of dollars in brand equity are at stake, you don’t want to be launching a new technology with your consumers until you are completely sure that it’s safe. To sufficiently answer this question KSV conducts a thorough assessment, however, there are early clues you can look for such as their ability to convert pilots into roll-outs and to what degree their clients have gone public with the startup's technology. If there are logos of other successful brands on their website yet nothing can be found publicly or announced by the corporate, it’s helpful to dig deeper to understand where the startup is currently at in relation to these engagements.?

Questions to ask:?

• Have other companies had successful outcomes with this startup?
• Are they willing to share case studies with proven results?
• Do they have client references for us to call upon?

Experimentation with new technology is oftentimes decoupled from the broader business objectives (often relegated to a corporate center of excellence). Unfortunately, this leads to pilot projects that simply don’t covert into widely adopted roll-outs across an organization because while they seemed exciting at the time, they didn’t offer a strong and compelling benefit to the business, or they were simply not a broader business priority upon completion.?

Questions to ask:

• Does this solution help us achieve a specific business goal?
• How would this solution add additional revenue to our company?
• How would this solution increase efficiency thereby saving us money?

One of the best and easiest indicators to spot when determining if a startup is worth meeting, is knowing whether or not they are working with your competitors. Traction for our purposes also includes consumer user-growth rates and recent funding round announcements. Essentially; we want to know if brands are biting, consumers can’t get enough, and investors are swarming! Warning signs we look for are: long periods of time since their last investment, a consumer base that is flat or declining, and short-lived corporate client relationships.

Questions to ask:

• Have they started to work with companies like ours (of similar size and scale)?
• Does this startup have a growing user-base with an audience that is similar to our own customers?
• Have they recently announced a new funding round and are their previous investors investing again?

Crucially, every dollar spent must yield a positive return. If a startup is making sensational sounding claims, then you should ask to see proof and to speak with a client reference. Client testimonials may not always be easy to obtain but they should be a mandatory step if their claims of performance that seem too good to be true.

Questions to ask:?

• Do the KPIs this solution focuses on align with our own?
• Does this solution have measurable and verifiable ROI figures to share?
• Does this startup have a client reference we can call upon to verify that the ROI claims are accurate?

(+) Other Variables

There are many more criteria when assessing startups for investment purposes, which we have not gone into here. Variables such as the Founder Team’s domain expertise and prior successes, advisory board member quality, market defensibility (ie: do they have strong patents?), as well as the economics behind the business (are they on a clear path to profitability?) are all valid points of consideration.

Did we miss any? Let us know in the comments below!

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Coming soon:

• How to evaluate a startup pitch deck.
• How to talk to a startup founder at a networking event!
• Top innovations on the corporate’s shopping list (Q4 2023)