Using practice-based evidence, VentureWell developed the Venture Development Framework (VDF) to describe the development of early-stage science- and technology-based ventures. This framework can inform the development, implementation, and evaluation of programs supporting entrepreneurs. For example, it can help practitioners define program scope, develop program content, or identify program gaps and partners. For researchers and evaluators, it can inform program evaluation by articulating what milestones ventures can achieve after completing different programs.

The foundational framework is presented in the technical brief Developing and Evaluating Programs for Early-Stage Entrepreneurs: Describing Science and Technology-Based Venture Development.

Scroll through the document below for an overview of the VDF.

Dimensions of Venture Development

The Venture Development Framework describes the development of science- and technology-based ventures at the very earliest stages of commercialization. It is focused primarily on a trajectory for for-profit ventures that will likely seek equity investments. It describes venture development along six dimensions:

Team & Venture Structures

The people involved in and the structure of the venture.

Technology Innovation

The product/service, including the ability to manufacture it.

Intellectual Property (IP)

The strategy and structures needed to secure venture-owned IP and to license university-owned IP (if relevant).

Market:

The intended stakeholders/customers.

Business Model

How the team will make money, self-sustain, and/or disseminate the innovation.

Resources

The financing and relationships/institutional support needed to advance the venture.

VDF Dimensions

Venture Development Stages

For each of the dimensions, we have identified stages: the observable changes we expect to see as a venture develops over time. The five venture development stages focus on teaching the concepts to promote progress.

VDF Stages

Explore the interactive framework below to learn more about the five development stages and their respective steps:

Team & Venture Structures

Early Stage Growth / Market Penetration

Step 9

The venture has outlined and/or hired its first employee positions. All early team members understand their roles, responsibilities, and compensation. The venture has started to consider its ideal Board of Directors.

Step 10

The venture has employees with a mix of technical and business skills. Founding team members draw a salary. There is an active and functioning Board of Directors.

Investment Readiness / Early Traction

Step 7

The venture has been incorporated (e.g., LLC, C-Corp). The team has a full-time formal CEO. The team has developed clear working roles and has a founders agreement. Team members have processes for working together (e.g., for communication and decision-making).

Step 8

The venture has established a capitalization table that illustrates ownership stakes, including equity share, and a system for compensation.

Business Model Development

Step 5

There is a provisional team lead, agreed upon by the team. All team members spend the necessary time working on the venture. The team has both the technical skills and business knowledge to meet technology and business model milestones. Team members have begun to identify processes and structures.

Step 6

There is a team leader in a full-time capacity.

Market Validation

Step 3

The team has an interest in business/entrepreneurship as a means of getting their technology into the world.

Step 4

The team has agreed on a path to commercialization and can articulate to an outside party why they are moving ahead. Team members have considered and identified their roles. The team has identified knowledge/skills gaps. Team members recognize the importance of team dynamics and team development.

Market Discovery

Step 1

There are one or two people working on a technology/issue they are passionate about or a grant-backed research project. They are interested in finding out how to commercialize their idea/technology.

Step 2

Team members have reflected on their goals for their technology and considered various paths to market.

Technology Innovation

Early Stage Growth / Market Penetration

Step 9

The team has a technical development plan that is aligned with IP strategy and product performance specs. The team has a manufacturing plan for its first product.

Step 10

The team has vetted and selected a manufacturer and has completed its first run. The company has launched its product.

Investment Readiness / Early Traction

Step 7

The team can articulate their innovation in both the context of a technology with vast potential and a product with a clear use case. The team has identified a piloting partner that enables them to properly test their technology. The team has begun to explore manufacturing/production capabilities.

Step 8

The team can share product specs and design and demonstrate real-world functionality to meet customer needs through a demonstration. The team has examined manufacturing options and has identified opportunities to produce the technology at consistent, sufficient, high-quality volumes and at an acceptable cost.

Business Model Development

Step 5

The team has developed a prototype that has been tested in a controlled/lab setting.

Step 6

The team can articulate next steps for testing the technology to meet customer needs (for example, what is needed for customers to place an order or to secure funding). The team has defined the parameters for field testing/piloting the technology and the metrics required to validate the technology. The team has identified the types of capabilities required to manufacture the technology.

Market Validation

Step 3

The team presents a technology that is novel and technically feasible with some credible proof of principle (i.e., preliminary testing/bench top testing).

Step 4

The team has defined priorities for technical development based on their understanding of customer needs.

Market Discovery

Step 1

The team has conducted very early/fundamental research. The technology is under development and there are many potential use cases.

Step 2

The team has developed a research trajectory for their technology, informed by ideas about potential use cases.

Intellectual Property

Early Stage Growth / Market Penetration

Step 9

The team has converted its provisional patent(s) to nonprovisional patent(s) and is considering other forms of IP including trademarks and copyrights. The team has developed its IP strategy, including processes for maintaining and creating new IP. If applicable, the team has secured an exclusive license to the technology from the institution.

Step 10

The team is implementing its IP strategy: international filings complete, process/deadlines for additional filings, legal fees budgeted, managing budgets, internal invention disclosure procedure. If applicable, the company is meeting the milestones and terms agreed upon in the licensing agreement.

Investment Readiness / Early Traction

Step 7

The team has filed provisional patent(s) application. The team has developed a plan on what initial IP to invest in and why (why IP is important to business, what non-provisional patents need to be filed) and has secured legal counsel. The team has drafted an operating agreement in which the IP has been assigned to the company, not to any individuals hired by the company. If applicable, the team has begun discussing licensing the technology from the university and/or has an option agreement.

Step 8

The team has a vetted plan for converting provisional patents to non-provisional patents and has begun to develop its IP strategy. The team has decided if and where to file international IP. If applicable, the team is negotiating/has negotiated the terms for licensing the technology from the university.

Business Model Development

Step 5

The team has begun the process of drafting a provisional patent(s) including claims. If applicable, the team has agreement with its tech transfer office on who owns the technology (team or university).

Step 6

The team has drafted a provisional patent. The team can articulate the timeline for the next steps after filing provisional patents, including any adjustments to the claims and to the international strategy if applicable.

If applicable: If the team owns the technology, the team has secured documentation of the waiver from the technology transfer office. Or, if the university owns the technology, the team has an understanding of university policies and has begun the conversations to set expectations on accessing an option or a license. The team is working with the tech transfer office to file the provisional patent.

Market Validation

Step 3

The team has compared its technology to other alternatives, completed a prior art search, and identified novel features of its technology. If applicable, the team has filed an invention disclosure with its university.

Step 4

The team has established a hypothesis for defensibility of its technology and determined the type of application they would file. The team understands the pathway to accessing IP (either by assignment to a company or a license). If applicable, the team understands its university policy for ownership and licensing of a university-generated IP.

Market Discovery

Step 1

Often too early for defensible IP; however, some teams may have filed patents on the core technology without clear claims for utility.

Step 2

The team has a basic understanding of similar technologies.

Market

Early Stage Growth / Market Penetration

Step 9

The team has tested and vetted all of the business model assumptions. Lessons learned are reflected in financial model and sales strategy. There is proof of customer interest; for example, early sales, contracts, or commitments.

Step 10

There is a repeatable, scalable, and/or recurring sales pipeline. The team has validated its business model and growth strategy through earning revenue and demonstrating a path to profitability.

Investment Readiness / Early Traction

Step 7

The team has a deep understanding of their chosen market sector. The team is discussing what sales opportunities would look like with potential customers. The team has proof of customer interest: for example potential customers have provided letters of intent or shared resources (time, money) for validating the technology for their own context (e.g., serving as a pilot partner).

Step 8

The team has documented a compelling, clear, and accessible market opportunity.

Business Model Development

Step 5

The team has a detailed and specific competitive analysis. The team can articulate the size of the market segment they are choosing to enter and the value chain in which they are operating. The team has engaged with additional customers/stakeholders to verify and iterate upon the value proposition. First customer market segments provide strong substantiation of the business case; for example, by letters of support validating the demand.

Step 6

The team has completed market testing with multiple customers/stakeholder groups in their value chain to validate the technology’s basic market assumptions (e.g., end-user context, needs, constraints) and to refine the value proposition.

Market Validation

Step 3

The team can describe the key partners and competitors in the market, understands the dynamics of the problem their technology will solve (how their technology addresses a specific customer’s problem), and can articulate why their technology is superior to alternative products (problem-solution fit).

Step 4

The team can clearly identify the specific market(s): who and how the technology will be used. Based on customer interviews, the team can articulate a clear business thesis and an initial value proposition: a description of the perceived value or importance of the product from the customer/stakeholder perspective (“demand”).

Market Discovery

Step 1

The team has an idea about a societal or technical problem/challenge (a “need”) that their technology may address.

Step 2

The team has identified use cases for the technology (how actors might use the technology to solve a problem) and grouped customers into market segments. The team has begun to analyze the pros and cons of alternative markets.

Business Model

Early Stage Growth / Market Penetration

Step 9

Step 10

There is a repeatable, scalable, and/or recurring sales pipeline. The team has validated its business model and growth strategy through earning revenue and demonstrating a path to profitability.

Investment Readiness / Early Traction

Step 7

The team has developed cost of goods sold and unit economic projections, and key financial assumptions for both spending and revenue projections.

Step 8

The team has validated components of the business model. The team has built an initial financial model, including bottom-up sales projections and assumptions for customer acquisition and operations.

Business Model Development

Step 5

The team can describe the customer base willing to pay to solve the problem they have identified (conceptual product-market fit).

Step 6

The team has developed a draft business model articulating the industry-specific marketing strategy, cost/pricing structure, distribution channels, and potential partners that need to be tested/validated.

Market Validation

Step 3

The team has identified a pathway to market and has a sense of the pros and cons involved with pursuing the chosen pathway.

Step 4

The team can describe possible revenue streams, how their competitive position impacts their goals for development of the technology, and potential alignment with a market opportunity.

Market Discovery

Step 1

The team has a desire to move the technology into the world but no/limited sense of how to do it or what options exist.

Step 2

The team has considered various pathways to market (selling a product, selling a service associated with the product, licensing, partnering, open sourcing, etc.). The team has considered the needs and perspectives of potential customers.

Resources

Early Stage Growth / Market Penetration

Step 9

The team has secured an initial round of angel or seed funding and is launched into early commercial phase. The team has secured a workspace and the technology, lab, or equipment resources it needs to commercialize their innovation (independent from their research institution).

Step 10

The team has secured the funding needed for a year’s worth of operations.

Investment Readiness / Early Traction

Step 7

The team has secured at least some outside, non-dilutive funding. The team intends to pursue equity funding within the next 6-12 months. If applicable, the team has a clear plan for infrastructure needs and ideas for a funding transition out of the academic context.

Step 8

The team has a well-developed fundraising strategy with milestones and has completed key deliverables needed to raise funding: term sheet, pitch deck, advisory board, regulatory strategy. The team has a financial plan that includes a cash flow forecast, a high-level income statement, and a balance sheet.

Business Model Development

Step 5

The team is likely supported by grants. The team can articulate how their profile and goals may align or not with different types of external funders or partners. The team has a basic understanding of the types of funders that can support the venture. The team has secured the necessary relationship to support development of the technology, including institutional support for product development and a technical/medical advisory board.

Step 6

The team has strengthened external relationships and understands key concepts (potential suppliers, regulatory requirements for financing, milestones funders expect, processes for engaging funders) that can help them to secure funding and other resources.

Market Validation

Step 3

The team may be funded through academic research grants, pitch competition awards, and/or friends and family. If applicable, the team has secured initial advisors and institutional support.

Step 4

The team can identify the type(s) of funding/resources needed for their desired pathway to market. The team can articulate the types of experts/strategic partners they need and has begun to develop key relationships; for example, with technical or medical experts.

Market Discovery

Step 1

The team is self-funded/volunteer-based or funded through academic/fundamental research grants. Grant-backed teams may have advisors or partners.

Step 2

The team understands the resources needed to bring a technology to market and has generated ideas for where they might find financial, infrastructural, or intellectual/expert support.

0. Market Discovery

1. Market Validation

2. Business Model Development

3. Investment Readiness & Early Traction

4. Early-Stage Growth & Market Penetration

example assessment of an E-Team at 2015 and 2019

team & venture structure:

From the start, the team knew they wanted to employ innovation and entrepreneurship to solve the clinical problem they identified. A clear leader emerged as they progressed through our programs. After incorporating and negotiating equity splits, they raised their first round of funding, built out their Board, and started hiring in 2019.

technology innovation:

The team identified an idea during a hackathon, and quickly started prototyping. They tested the prototype in a lab setting and worked with end users to define product specifications. They did field tests throughout 2016 and 2017 to refine the product. The team was manufacturing and shipping orders by 2019.

intellectual property:

Through the hackathon, the team was encouraged to quickly file a provisional patent, which has since been issued. The team employs regular counsel as they continue developing new IP.

market:

While the team worked with end-users from the start, there was a learning curve around value chains and identifying the paying audience. They have since learned about customer discovery and conducted product pilot tests.

business model:

Since formation, the team knew they wanted to license or sell their product. They developed a sales pipeline after learning about the value chain, testing cost assumptions, and adjusting pricing. Their product is now in the market and the company is building a repeatable sales pipeline.

resources:

A large grant and competition prizes kept the team in business early on. They had access to many scientific advisors, and sought business expertise for their board to help navigate their first round. The team now has an active and supportive Board of Directors.

frameworks for different commercialization pathways

Since its development, the VDF has been designed to be a living and evolving tool. Through our use of the VDF in our programs, we are observing different scenarios that exist as early-stage innovators seek to commercialize their solutions. We will share our insights as we learn, updating the foundational framework as necessary and creating additional versions for different scenarios as identified.

In reflecting on our experience, we identified three scenarios that require unique milestones in at least one of the six dimensions in the foundational VDF:

Scaling through Partnership or Licensing, when the innovator plans to support scaling of the innovation by transferring the innovation and its operations through partnership or licensing.
Intrapreneurship, where the innovator begins by developing their innovation within an established organization.
Intellectual Property in the Global Context, in which the innovator works where intellectual property strategies are not US-centric or US-patent-specific

download the VDF briefs