Startup Essential Workshop #3 – Strategic Clarity and Value Creation
The topic of the third Lecture in the Startup Essentials Workshop Series by VentureLab was Strategic Clarity and Value Creation. While many talented science students may have amazing breakthrough ideas, Andreas Jurgeit taught us how to come up with a creative, flexible and adaptive business model. As he said “The best engineering doesn’t help you if someone comes and buys it out of the liquidation of your company”. With 10 years’ experience in biotech and venture capital, he is the guy to listen to!
A business model allows you to pinpoint how your company will generate revenue, what position it will have in the value chain of your chosen industry and how it integrates with the others in that ecosystem.
There are no rules to what a business model should look like – you can take existing business models that already work with your industry, you can emulate and adapt them to your own case, however be sure to be flexible in time with how your own startup and industry grows. On the other hand, you can also be innovative and disrupt existing industries by reinventing their business model - look at Uber, Facebook, Alibaba and Aribnb.
The fundamental choices you should make, however, remain the same. Do you sell a good or a service? Is it tangible or intangible? Where does your revenue come from – a one-time hardware sale, a subscription fee, a “razorblade model” (where you generate revenue through hardware-related supplies) or a market place model, where you just facilitate other transactions.
Business Model Canvas
One way to develop a business model is to use the business model canvas. The business model canvas is a framework for generating a business model from an idea.
You should answer the following questions to be sure that you have a clear idea of your startup.
1. Customers – Who are they? Know them and their preferences well!
2. Value proposition – What do you do for your customers? Do you solve a problem they have, create value they want or provide a service to them?
3. Channels – How do you reach your customers?
4. Customer relationships – How do you interact with your customers?
5. Revenue – How do you get money out of it?
6. Key Resources – What will you need to carry out your activities? This is the engine of your company.
7. Key Activities – What is the core activity you do for your customers? This is the steering wheel of your company.
8. Key Partners – these are the gas stations on the way that will help your company.
9. Costs – Be careful to differentiate between flexible and fixed costs, keeping the fixed costs at a minimum.
Every startup should also have a roadmap. The Roadmaps purpose is to help you make a plan on your expenditures and value creation, meeting specific milestones along the way in time, allowing you to check if you’re on the right track. It should be statin you will change it many times throughout your lifetime (together with your business model) as you grow, develop and look for new opportunities. Meeting your milestones will not only increase your valuation and the impression you make on investors, but it will also ensure that you have concrete plans on how to complete your business model strategy. The time frame of a roadmap can vary between 6 and 18 months. Use metrics to monitor if you are on the right track.
Important tips for startups are also: Talk to your customers as soon as possible and raise money as late as possible!
During the workshop, the participants were encouraged to work on their own business canvases and roadmaps, present them and receive professional feedback from Mr. Jurgeit.