Startups face many risks. Too many to count. But, that's the nature of a startup!
While the risks vary greatly among the many startups, most of these risks can be grouped into three major categories:
• Market risk,
• Product risk, and
• Execution risk
Product risk comes down to the question: can the team deliver the product at a commercial-scale and at a reasonable cost level?
Market risk is about getting the buyer to buy the product. Will the market accept the product or service in a form the company can deliver?
Execution risk is about management. Can the team build the business? Unlike product and market risk, execution risk is present at every stage where people are involved. From the earliest point of bringing on co-founders and advisors, through rapid growth, all the way to an IPO and beyond, every company faces execution risk.
A venture capital once told me that the risk profile guides a startup on what type of financing to seek.
• One unresolved risk category = Venture Capital
• Two unresolved risk categories = Seed Stage
• Three unresolved risk categories = Angel or Friends and Family
The Abunden Framework© focuses on reducing execution risk for companies at all stages.
