I was doing some research work for a friend and I always ask myself some qualitative questions to clarify the business. The goal is to help you identify the opportunities in the market, risks to mitigate, resources needed to execute the plan, and deals needed to supply the resources.

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In investigating viable ideas, there’s a general framework:
  1. Due diligence (qualitative research)
    • Business model
    • Industry analysis
    • Implementation plan
  2. Valuation
  3. Deal structuring
The first step in research is understanding the business model.
  • What is the value proposition?

  • What are the target markets?

  • Who are the critical members of the team (could be asset or liability)?

  • Where does competitive advantage exist?

    • How long does it last? You need durable competitive advantage.

    • Can competition with larger resources neutralize your advantages?

      • Must have a series of advantages (e.g., v2, v3, v4, v5, …) to maintain advantage

    • Can you endure long enough to be bought out?

  • Why is there a competitive advantage?

  • When will development, launch, and cash flow breakeven occur?

    • Time?

    • Resource intensity?