Venture forth on a dragon's back
Shuttleworth's company will invest in small entities to help develop their new ideas
October 8, 2009
By Thabiso Mochiko
Here Be Dragons (HBD), which wants to invest between R10 million and R25m in small enterprises with new ideas, says 65 percent of businesses fail in their first year of trading because of entrepreneurs' failure to develop and implement a comprehensive commercialisation strategy.
HBD is a venture capital business that was started by entrepreneur billionaire Mark Shuttleworth to assist small firms with funding, mentoring and marketing. HBD takes a 25 percent shareholding in the companies that it assists.
The venture capital firm describes a commercialisation strategy as a detailed action plan on how a company will grow from an early stage of entrepreneurship to a fully fledged business that has the potential to expand globally.
A sound commercialisation strategy also paves the way for access to funding, which is often vital to unlocking the potential of the business.
"In our ongoing search for businesses in which to invest, we consistently encounter entrepreneurs with good ideas and big visions. While that is a crucial part of any successful venture, it is just as important to focus on the building blocks necessary to implement that vision," says HBD chief executive Julia Fourie.
When developing their commercialisation strategies, Fourie says entrepreneurs tend to place too much emphasis on the technical aspects or functionality of their product or service, without linking this to other elements of building a good business, such as marketing and finance.
"Focusing on the customer is a crucial aspect of any commercialisation strategy. An innovative technical solution in isolation will not guarantee success of the product. Customers also need to be made aware of the product and why it is superior to competitors," Fourie says.
Last month the company launched an online facility that enables interested small firms to determine if they qualify for capital injection. The test guides applicants through a number of important decisions and points they would have to consider carefully should they want to form a partnership with a venture capitalist such as HBD.
How to be a commercial success
Here Be Dragons' steps to implementing a successful commercialisation strategy:
1. Where are we now?
Identify where your business is right now. This can be done through a SWOT (strengths, opportunities, weaknesses, threats) analysis. It is important to identify the firm's resources, capabilities and distinctive competencies as well as actually defining your business.
At each stage of the commercialisation strategy, it helps to confront some tough questions in order to develop solutions. At this stage, you need to be able to answer questions such as: what do we do, why do we do it and how do we do it better?
2. Where do we want to go?
Clarify where you want the business to go. This includes identifying a clear target market and customer profile. At this stage, it is necessary to set three-year business objectives, outline key goals and targets and ascertain what competitive advantages you will need to achieve these ambitions. When identifying where you want the business to go, you need to be able to answer questions such as: what is our unique differentiating position, how do we maintain this and how can we beat or avoid competition?
3. How will we get there?
Implement a commercialisation strategy is understanding how you will go about getting your business to where you want it to be. You need to set strategic actions and implementation strategies for each functional and business division.
A detailed financial plan is critical, including how you will allocate your resources. It is useful to plan for different scenarios, testing strategies against a series of alternative futures. Organisations use scenarios to make flexible long-term plans or prepare appropriate responses to probable future trends and events.
4. Finally, identify where the gaps are in your commercialisation strategy and develop key strategies to close these.
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