Page 119 - Transforming an Idea Into a Business with Design Thinking

98 ◾ Transforming an Idea Into a Business with Design Thinking

◾◾ Many online service providers offer a “Freemium” model which lowers
the barrier to adoption by allowing customers to use the service before
buying. The Free portion of the model may restrict advance features
or may limit the duration of use, which is also called a “trial period.”
The premium portion of the model is where the value is captured from
customers.

5.3.6 Value Funding

Finally, the quintant of funding is as important for a start-up’s survival as
air is for humans. The graveyard of start-ups is filled with stories where
start-ups did an amazing job in identifying a market opportunity, fill-
ing a real need and building the initial prototype to solve that problem
in a manner that created real value for the customers. They were also
able to capture some of the value for their own operations as well, but,
as the saying goes, they ran out of runway. Their burn rate (net oper-
ating cost per month) became unsustainable, and they weren’t able to
raise enough funds in time to save the collapse. At the initial stage, the
handful of founders could bootstrap and bring the first prototype off the
ground, however, to scale, make a production-ready solution and build a
lean organization that could serve customers, they needed to raise funds.
There are many books that extensively cover the fund-raising aspects of a
start-up as well as financial management, but here are some key points to
consider:

◾◾ Fund-raising means giving a portion of the company to investors. If
there is a way to make the start-up self-sustaining, try that first.

◾◾ Fund-raising is an exhausting process which takes focus away from
operations for a significant period of time.

◾◾ Think of a way in which customers could fund the development of the
product as well.

◾◾ Have a clear understanding of all components of cost and set mile-
stones (aligned with the stages and steps described in this book to have
a clear view of the sustainability of the operations).

Resources, Processes and Technology
As you traverse through the Business Model Map, in each of the quintants,
discuss and document the resources, processes and technology needed.
Here are some of the questions to ask in each of the quintants: