Select - rigorously selecting only the most promising combinations of market need and technology solution for company formation
The third step is to review the opportunities identified at step two and then subject them to a set of 13 rigorous, objective filters to screen and assess their potential. These filters include an assessment of how game-changing the opportunity is (Disruptive Index), the market size, the sustainable differentiation (long-term IP strategy) and latency (time to market).
The most important filter is the Immediate Compelling Quantitative Value Proposition (“iCQVP”), which is a predictive measure of what market-changing solutions the market is likely to adopt. The iCQVP establishes an empirically derived, economic threshold above which the market will generally adopt, because companies will make money each and every time they use the solution. If the ratio resulting from the iCQVP is below the desired threshold, the market might still adopt the solution but, since adoption cannot be predicted with any certainty, the opportunity is eliminated from consideration. During this step, the big companies that introduced the unmet need play a critical part in validating the potential solution.
If an opportunity survives step three, a NewCo is created by XL TechGroup to exploit it, with the Technology Partner typically receiving a minority equity stake in the NewCo in exchange for contributing the IP underlying the technology. Those opportunities currently going through Stage 3 are outlined in the Pipeline section.
Reducing Market Adoption Risk