Stage 4 – Validation
The validation process involves testing the entire project for its viability. This includes the product or service itself, the production process, customer acceptance and the financial requirements of the project.
Areas of consideration include:
- Commercialisation options.
- In-house testing to check product quality and performance.
- Field / clinical trials to verify that the product works under user conditions, including gauging customer reaction.
- Incorporate trial feedback and make any product changes and repeat validation / trial process.
- Pilot production to test production processes and determine more accurate costs.
- Manufacturing translation and pilot translation including scalability.
- Organising the business – structure, location, incubators, leasing, strategic alliances, partnerships and joint ventures, accounting.
- Financing growth – planning growth, financial plans, monitor and review costs, bankers, investors and VCs, detailed cost analysis.
- Business planning – start-up business plan or established business plan.
- Sales and marketing in place.
- Market test to determine the effectiveness of the product launch plans and to trial the selling approach.
- Human resources.
Questions to consider include:
- Was the full scale manufacture / or service delivery for the prototype a success?
- Did the scaled up manufactured product or delivered service prototype pass performance criteria?
- Have all technical or delivery issues been overcome?
- Are potential customers (end users and distributors) satisfied with the product / service, did it meet their requirements / expectations?
- Have projected costs been met and revised following testing?
- Have design reviews been finalised?
- Did the product / service demonstrate and maintain competitive advantage?
- Have contracts been executed with collaborator / partner?
- Have all legal, regulatory and compliance standards been adhered to?
The following is a practicle guide to achieve this:
Set yourself some goals, actions and deliverables:
Goals – These should communicate the desired outcome you are trying to achieve at this stage
- Scale up manufacture run to ensure confidence in the design, specifications and manufacturing process for a commercial run.
- Develop or oversee development of documentation for manufacturing handover including final CAD drawings etc.
- Develop quality plan.
- Verify the usability of the accompanying documentation for manufacturing, sales and marketing plans and user materials.
- Gauge feedback from end-users to full scale manufactured product.
- Confirm appropriate commercialisation option
Actions – What needs to be done to realise your goals
- Manufacture full scale run of functional prototypes.
- Identify any issues for scale up manufacture and develop new specification through new prototypes if required.
- Revise development budget.
Sales and Marketing
- Revise Marketing and Promotional Plans.
- Confirm sales forecast.
- Revise draft user materials including other languages where required for quality purposes.
- Update product design and specifications.
- Revise Manufacturing Plan.
- Review manufacturing partners and finalise production schedule.
- Develop manufacturing documentation and worksheets.
- Perform and document reliability testing.
- Organise trial testing (confirm trial sites).
- Compare trial results to project specifications, pre scale up performance and end user needs.
- Gather and document feedback from end users on performance and assess potential for continued use.
- Test packaging materials.
- Update Quality Plan.
- Develop equipment validation and maintenance protocol.
- Employ key people.
- Begin staff training.
Business and Finance
- Confirm NPV and ROI.
- Update Commercialisation Plan.
- Update Business Plan.
- Revise exit strategy.
- Approach investors.
- Develop VC Plan.
- Evaluate Opportunity
Deliverables – Outcomes of your actions
- Functional prototype.
- Verified technical report.
- Final design reviews.
- Updated product specifications.
- Revised development budget.
Sales and Marketing
- Draft user materials.
- Updated Marketing Plan and associated materials including website.
- Revised Promotional Plan.
- Final Manufacturing Plan and schedule.
- Finalised packaging and shipping.
- Manufacturing documentation and worksheets.
- Results for reliability testing and field trials.
- Results for equipment validation and maintenance protocols documented.
- Updated Quality Plan.
- Results for packaging and shipping testing.
- Employee contracts signed off.
- Documentation and sign off for staff training.
Business and Finance
- NPV and ROI.
- Execute contract/agreements with partners/collaborators.
- Revised Commercialisation Plan.
- Revised Business Plan.
- Exit strategy.
- Investor meetings and follow-ups.
- VC Plan.
- Evaluation Report.
Decision: Progress idea, further research, exit or stop.
Below are some tips to help keep you on track:
- Be persistent – Don’t quit if deals fall through, (and don’t pin your hopes on deals closing), use it as a learning experience.
- Concentrate on activities that have an outcome – if it can’t be measured, don’t do it. You have limited resources (time, money etc.) don’t waste time focusing on actions which don’t result in a measureable outcome.
- Hire good people, those that have the skills and are committed to creating a successful business.
- Understand what customers want.
- When it comes to customer interactions (including engaging potential trial sites), exceed expectations, make a concerted effort to make them happy. You’ll learn a lot more (even receive competitor information) if a customer feel comfortable with you.
- Keep bootstrapping, don’t spend your money.
- Ensure you have the funds to proceed.
- Before approaching investors you need to determine the following:
o Does your business have growth prospects and is your team ambitious to grow?
o Is you IP or product competitive? Is it unique?
o Do you and your team have relevant experience in the industry?
o Does your team have expertise in management, finance, marketing and other crucial commercialisation skills? If not, do you have access to these skills?
o Are you willing to sell equity or shares to a venture capital investor?
o Are you prepared for stringent financial reporting?
If you answered no to any of the above questions, then following the venture capital route at this point in time will be a waste of resources time and may strain your reputation for future funding activities. You will need to explore further funding options.
- Anecdotal evidence from investors indicates that the key basis for rejection of investment proposals at the earliest stages are (in order of occurrence):
o Poor market intelligence analysis.
o Poor market research and little understanding of the target market and what is required to get into and survive a particular market.
o The risks versus reward benefit – too much due diligence (verification of feasibility), required for the stage of investment.
o Lack of management expertise and commercial track record experience.
o Technology and business risk – unproven technology.
o Poor business planning and insufficient funds requested to make the business a success.
- Get the product to market in a reasonable timeframe, it doesn’t need to be perfect. Iterations can be made post launch. Just ensure the product stands up to reliability testing and can gain confidence in the market and meets the market need. Many improvements can be made quickly post launch.
- Stay committed.