Knowing when to pull the plug — Part 2

With any corporate venturing program, one of the most important factors that will determine financial returns is the ability to stop investing in projects that simply won’t work out at all, or will be inconsequential to their parent company, even if they do succeed.

Here’s Part 2 of a set of questions to revisit when evaluating your portfolio of new ventures.

7. An offering has unexpectedly been introduced into the market that solves the same problem we do.

Sometimes, the reality on the ground is that someone else has seen the same problem or opportunity and moved on it in a way that makes your offering, if not obsolete, at least a lot less desirable than it might have previously been.

The reality is that very few new ventures, whether created by corporations or by startups, are unique in perceiving a problem to be solved. Just take content streaming. While firms like Spotify and Pandora have made a success of it in music, there are dozens of other firms with groovy names like Rdio, Grooveshark and Crowdmix that didn’t make it.

8. Customers are reporting that a cheaper or lower quality product is “good enough.”

The challenge here is that in the early days of many product categories, volumes are so small that unit economics are incredibly challenging. A new offering, therefore, has to be so irresistible that customers are willing to dig into their wallets to get hold of it. Unfortunately, such deep forms of…