1. 1© John Mullins 2009 Marston Venture Management: What happened? John W. Mullins London Business School

2. 2© John Mullins 2009 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. 3© John Mullins 2009 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. 4© John Mullins 2009 Darian Holdings Raised small amount of angel money An opportunity arose to buy a competitor at a very attractive price Having considerable success: ranked among UK TechTrack 100 for 2005, 2006, 2007, 2008

5. 5© John Mullins 2009 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. 6© John Mullins 2009 Research Question How do entrepreneurs (and investors, too) best assess market opportunities?

7. 7© John Mullins 2009 The Conventional Wisdom Three crucial factors for entrepreneurial success –Management… –Management!

8. 8© John Mullins 2009 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. 9© John Mullins 2009 Point of Confusion #1: The Market / Industry Distinction What’s a market? What’s an industry? These are frequently confused!

10. 10© John Mullins 2009 The Seven Domains of Attractive Opportunities Market DomainsIndustry Domains Market AttractivenessIndustry Attractiveness

11. 11© John Mullins 2009 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. 12© John Mullins 2009 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

13. 13© John Mullins 2009 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. 14© John Mullins 2009 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry 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 Sustainable Advantage

15. 15© John Mullins 2009 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. 16© John Mullins 2009 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 investors and investment committees

17. 17© John Mullins 2009 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.”

18. 18© John Mullins 2009 For the rest of the story… The New Business Road Test