In the life of a venture-backed enterprise, there is a defining
moment when the entrepreneur is momentarily on top of the world. It
occurs when the lawyers for the investors and the entrepreneur
complete their documentation, and the first check of investment
capital is wired to the entrepreneur's bank account.
It is a truly a moment of exhilaration. It is the culmination of
months if not years of extremely hard work, sleepless nights,
headaches, heartaches, and financial crises. It is the end of an
emotional roller coaster.
Reflecting back, the entrepreneur conceived a venture idea,
proved its economic feasibility, developed the venture opportunity,
and convinced investors to back the enterprise. Now the life of the
venture embarks on a new level of commercial activity -- venture
introduction, the fourth stage in the commercialization process.
The introduction stage consists of three activities: the pre-
production prototype, market validation, and business start-up. The
introduction stage can be considered the defining moment for the
enterprise: the business is launched, limited amounts of product are
produced and limited sales are made. However, it is a rare venture
that experiences a perfect launch -- equipment setups are out of
caliber, systems fail to integrate, suppliers are too early or late,
advertising is wrong, or the bank fails to set up your line of
credit. The objective is to work out the kinks as quickly as
possible, maximize efficiencies, generate revenues, break-even
financially and achieve profits.
Based upon the desired features of the product as defined in the
engineering prototype, a production and operational process, whether
it involves people or machines, is put into place to achieve the
objective of a reliable, manageable, and dependable system.
Alternatively, contracts are executed with outsourced providers. In
either case, it is important to verify that the technical
assumptions made in the business plan about costs and capacities are
Completion of the pre-production prototype step will result in
knowledge about the manufacturability of the product, the
manufacturing processes, maintainability and reliability, materials
and components lists, plans for field support, installation and
production costs, safety and environmental factors, time schedules,
and regulatory requirements.
If the venture involves a service product, the pre-production
prototype activity will result in knowledge about the systems
requirements, resource allocations, integration procedures,
interoperability features, and customization needs. Once the
assumptions are finally tested and validated, full production is
launched or services are delivered.
Even though production is launched, no one would produce a
million widgets without knowing whether the end-user was satisfied
with the initial product. …