Contents

Venture investment hypothesis tree

Context

• Identify the company’s riskiest assumptions with Hypothesis Based Problem Solving
• What is Hypothesis Based Problem Solving?
• Why is Hypothesis Based Problem Solving important?
• How is Hypothesis Based Problem Solving used?
• Use the Desirability, Viability. Feasibility Framework to build the base of your hypothesis tree

The framework

Because the DVF framework is naturally MECE and designed for developing brand new solutions, it lays out the perfect foundation for developing a hypothesis tree to diligence an early-stage company. You can identify and prioritise diligencing the riskiest assumptions. For example, a generic hypothesis tree using the DVF framework might look something like the following:

• **Desirability (product):** solving a real and painful problem with a compelling solution for an identified customer segment(s)
• **Viability (market):** an attractive market in which the company has an ability to win with an economically viable commercial model
• **Feasibility (team):** a technically feasible solution built by a team with the required skills and capabilities who can attract sufficient capital to deliver
• Investment attractiveness: an investment can be made at a reasonable and at-market valuation on appropriate terms based on reasonable capital requirements and no show stoppers or red flags

Other frameworks for evaluating venture investments

Simple frameworks