RAG Status – How to Use it for Searching Startup Projects?

Every project going into our hands is different. And there are a lot of them! Deciding on which ones should be looked into with further inquisitiveness and, later, which should be eventually shortlisted for the community voting, calls for employing some standards. With years of experience in scouting for, analysing and accelerating startup projects, we’ve decided to build our own system, seeking inspiration for it in a reporting methodology known in project management as RAG (from: red, amber and green).

RAG reporting is essentially a traffic light system that tells you that ‘red’ statuses are not good, ‘amber’ statuses signal caution and ‘green’ ones mean that everything is alright.

The system is simple and intuitive, and colours can be assigned to either fixed measures or threshold scores. In our case we came up with 11 selection criteria, listed below. Each of them has its own KPI, providing context to the presented data. And finally a measurement threshold is defined, which determines whether the report’s figures, for a given project, are assigned a red, amber or green colour for an instant visual assessment.

Here are the 11 evaluation criteria, presented together with all available statuses. Please note also that some of the criteria are interconnected, with certain dependencies between them (e.g., for a Customer Traction criteria to be in green, a previous one – Go To Market – has to be of the same colour).

  1. TEAM
Criteria:Explanation: 
Proven ability to attract new team membersThere is a proven ability to expand the operational and executive team. More people are attracted by the project idea and stay engaged because of the founders’ vision, ideals, added value, higher cause etc.
Complete teamMain (executive) positions are covered.
Leadership team incompleteOne (or more) of the early stage executives is missing.
  1. PAIN POINTS
Criteria:Explanation:
Quantified (time / money)The team not only managed to identify a need but also knows how much time and money their prospective customers lose by using other products/solutions (or not using any).
QualifiedThe team is able to define a problem (after conducting i.e. surveys).
AssumedThe pain points are only assumed.
  1. VALUE PROPOSITION 
Criteria: Explanation:
Proven value exchangeThere are first customers (either paying ones or just testing) using the product on a recurrent basis.
Quantified (TCO + ROI)The team can provide information covering customer acquisition costs and product development costs. This is related to an expected revenue.
Assumed / QualifiedThe team is able to describe why someone should use their product/service.
  1. PRODUCT
Criteria: Explanation:Conditions:
 CompletedThe product is validated by customers.Pain Point (s) and Value Proposition in green, Customer Traction in yellow.
  BetaThe beta version of the product is developed and tested by a number of (test) users.Pain Point (s) and Value Proposition in yellow.
 SpecifiedThe product specification is defined, however not put into work (not operating) yet. Mockups, wireframes, tech specs or product specs are ready.Pain Point (s) and Value Proposition in yellow.
  1. GO TO MARKET
Criteria:Explanation:Conditions:
 ExecutingThe team approaches and interacts with customers. There are paying customers.N/A
 DefinedThe team has defined a go-to-market strategy and the product is in a testing stage (testing by a small number of users).Value Proposition in green, Product and Customer Traction in yellow.
NoneThere is no defined plan to approach prospect customers.N/A
  1. CUSTOMER TRACTION
Criteria:Explanation:Conditions:
Exponential, provable and sustainable growthNumber of customers grows from one period to another at a good rate.Go To Market in green.
Paying /non-paying customersThere is a certain number of customers using the product on a recurrent basis (either paying or testing/providing feedback).Product in green.
No customersNo customers yet.N/A
  1. FINANCIAL TRACTION
Criteria:Explanation:Conditions:
Sustainable growthNumber of paying customers grows from one period to another at a good rate.Go To Market in green.
Minimal growthThere is a certain number of paying customers using the product on a recurrent basis (either paying or testing/providing feedback).Product in green.
No/few customersNo customers yet or the monthly revenue level is low..N/A
  1. BUSINESS MODEL
Criteria:Explanation:Conditions:
Scalable, repeatable & profitableThere is evidence of a business model working successfully (the project makes money, scales up, etc.).N/A
 DefinedThe team has defined a strategy to make the project idea profitable. It is currently in a testing phase, with some test users involved.Customer Traction in green.
UndefinedThere is no precisely defined business model.N/A
  1. COMMUNITY
Criteria:Explanation:
>10k followersAcross all channels.
2-10k followersAcross all channels.
<2k followersAcross all channels.
  1.  REVENUE CAPITAL ECOSYSTEM
Criteria:Explanation:
Defined added valueThere is a well defined scenario of value added by the project to the RevCap Ecosystem (e.g. by cross selling actions). 
Potential added valueThere is a potential value added by the project to the RevCap Ecosystem (e.g. by cross selling actions) though it is not quantified/KPI’ed.
Not defined /Difficult to defineIt is difficult to establish any added value to the RevCap Ecosystem for the time being.
  1. COMPETITION
Criteria:Explanation:Conditions:
Sustainable differentiationProviding great and hard-to-replicate value proven by a track record. Customer Traction in green.
Differentiated(differentiation points identified)Product differentiation points are defined though not validated.N/A
UndifferentiatedProduct differentiation points are not defined.N/A