New ‘iterative’ startup methodologies, such as Eric Ries‘s Lean Startup and Steve Blank‘s Customer Development, raise just as many important new questions about investors as they do about startups

Each of the questions below are based upon profound potential differences in the approach to such things as business model flexibility and customer requirements discovery processes.

Identical results (including, for example, ‘pivots’ to implement more easily verifiable customer requirements than those initially targeted) might represent reassuring progress in a VC-approved ‘iterative method’ startup’s monthly board report, but would potentially raise concerns about a worrying lack of reliability in a startup whose agreed modus operandi was more traditional and followed a ‘major changes of target market need investor approval’ model.

  1. what’s it like being pitched by a startup which claims to be following lean startup principles?

  2. what’s different about lean startup business plans?

  3. how do board meetings with lean startups differ from conventional ones?

  4. do VCs evaluate the performance of lean startups differently?

  5. are negotiations with lean startups any different from negotiations with conventional ones?

  6. do VCs have adequate metrics to measure lean startup progress?

  7. do lean startups really have improved success rates, survival rates, returns?

  8. is the ‘time to exit’ shorter for lean startups?

  9. are lean startup valuations typically higher?

  10. is it still way too early to tell?

  11. would VCs consider recommending lean startup principles to any of their existing portfolio investments?

  12. are VCs seeing pitches from startups using lean methods from sectors not usually associated with lean startups?

These issues aren’t just obscure nit-picking dreamed up by the iij. The protagonists of the methodologies themselves have spoken about requiring new ways of evaluating startup progress. Eric Ries talks about ‘innovation accounting’, whereas Steve Blank has used tools like Alex Osterwalder‘s Business Model Canvas to track requirements discovery (‘pivoting’) progress.