Potential investors considering the merit of a new investment opportunity will generally ask a common set of questions, to help them ascertain whether or not the opportunity has commercial potential.
Unsurprisingly, most industry pitch decks (used as the basis of presentations to potential investors) will comprise a version of these questions, which fall under three key themes:
- Market impact - i.e. will customers want the innovation?
- Commercial feasibility - i.e is the business that’s offering the innovation capable of making, delivering and supporting it?
- Commercial viability - i.e. will the innovation be financially successful?
When assessing applications under the Ārohia Innovation Trailblazer Grant, it’s important we establish whether an innovation has commercial potential. This is because the innovation will need to reach, and ideally succeed in, the market, in order to deliver the benefits to the wider innovation ecosystem that we want to encourage.
The application for both the Ārohia Seed Grant and Ārohia Full Grant therefore includes questions about commercial potential. Market impact is assessed for the Ārohia Seed Grant, and market impact, commercial feasibility and commercial viability are all assessed under the more comprehensive Ārohia Full Grant application.
In each application, the questions we ask closely resemble those you would be expected to answer in a typical investor pitching scenario.
The following information lets you see in more detail what we mean by each of the three factors that together define commercial potential.
Market Impact is about the impact an innovation will have in the marketplace, both in terms of:
- desirability/appeal to target customers (buyers and/or users)
- the size of the market created and anticipated market share over time.
When assessing market impact, potential investors will typically ask questions about:
- the customer problem/unmet need that the innovation will address
- the solution that the innovation offers - e.g. How does it work, how does it solve the problem/unmet need and how does it benefit/add value for customers?
- how the innovation differs from what’s currently available to customers/users
- the size of the potential market, the market share that you hope to capture, and the growth you anticipate over time.
Commercial feasibility is about critical factors involved in getting the innovation to market and operating it successfully.
There are three key areas that potential investors will typically focus on when assessing commercial feasibility:
- Team - a good team, comprising the right people, is one of the most important assets there is when it comes to taking an innovation to market
- Go-to-market and channel plans - regardless of the benefits your innovative idea is capable of delivering, it will remain an idea unless you can be sure of getting it into the hands of the customers who stand to gain from it
- Technology roadmap - potential investors will want to be confident that any technical aspect of your solution is sufficiently robust to enable the successful commercialisation of your innovation.
Commercial viability is about an innovation’s ability to financially succeed in the marketplace.
There are three key areas that potential investors will typically focus on when assessing commercial viability:
- Business model and financials - your innovation may have considerable appeal to customers, but unless it’s capable of making money, it’s unlikely to be the basis of a successful business or have any appeal to investors - a robust business model, showing how your innovation will generate a profit, is therefore very important
- Sustainable growth roadmap - launching a successful innovation is one thing, but you will also need to show how it will continue to retain its appeal and profitability beyond the short-term
- Recent traction and partners - during the early stages of the innovation pathway, before you’ve actually launched something into the market, you don’t have any actual sales that can provide hard evidence of your innovation’s appeal - a strong indicator of an innovation’s potential, however, can come in the form of traction achieved pre-launch, such as significant successes or expressions of interest.
Updated: 19 May 2023