Instant MBA: What Investors Want

Written by Kim Shiffman

What investors want

Who says reality-TV has nothing to do with real life? A trio of researchers, including one from the Schulich School of Business and one from the University of Waterloo, recently analyzed interactions between entrepreneurs and investors on CBC’s Dragons’ Den and came up with eight factors used to assess an investment opportunity. They include: management’s experience; the market size; adoption (will the target market buy it?); product status (is it ready for market?); protectability (is it easy to replicate?); customer engagement (does it meet customers’ needs?); route to market (is there a distribution plan?); and financial model (when will the firm make money?). Think TV shows have nothing to do with real-life decision-making? Studies on Jeopardy and Deal or No Deal have confirmed otherwise.

No R&D? No problem

R&D expenditure — and the resulting innovation and technological change — is a necessary condition for economic growth, right? A new study co-authored by Moren Lévesque of the Schulich School of Business presents a model that challenges that wisdom. It suggests that while research-based entrepreneurship increases productivity and product variety, “imitative entrepreneurship,” in which companies replicate technologies developed by other firms and therefore spend little on R&D, contribute to economic growth by increasing competition, thus forcing R&D-based entrepreneurs to generate more commercializable innovation.

Originally appeared on PROFITguide.com