Cambridge UK technology design and development hothouse, Cambridge Consultants, has launched an initiative to stop startup businesses vanishing down the plughole.

The guide certainly doesn’t soft soap young turks keen to turn their Eureka moment into a commercial success. Cambridge Consultants’ own track record in creating new businesses certainly scrubs up well.

Over its 50 years’ existence the business has created more than 20 companies – five of whom have gone on to be listed on the London Stock Exchange. Several have been sold in multi-million pound deals.

The company has created over a billion pounds' worth of value and more than 3,000 jobs through its spin-outs and is regarded as a founding father of the Cambridge Phenomenon.

‘Bathtub to Warehouse’ leans on the legend of Greek scholar Archimedes who reportedly proclaimed ‘Eureka!’ when he stepped into a bath and noticed that the water level rose — he suddenly understood that the volume of water displaced must be equal to the volume of the part of his body he had submerged.

The guide looks at the key questions investors will ask to assess whether a start-up’s product idea is the next big thing and uses Cambridge Consultants’ established approach to product development to help answer them.

“Our phased approach to product development tackles the tough technical challenges first – there is little point spending time and money on ‘turnkey’ engineering when the core technology might not work,” said Duncan Smith, head of product development at Cambridge Consultants.

“And through our work with a variety of start-ups – and by spinning out our own companies – we have seen how this phased approach not only de-risks a development technically, but also commercially. This enables the start-up to build a coherent picture of the position of the company, answering many of the questions that investors will ask ahead of investing any further.”

As a leading product development company, Cambridge Consultants has helped many companies de-risk and speed up the process of getting to market, complementing their in-house capabilities without having to grow their company with a full-scale product development team.

In the early stages, as well as answering the tough questions investors will ask, the most important thing is to communicate the benefits and advantages of the new technology. This can be hard with innovative products that do not have the normal ‘reference points’, and is best done using demonstrators.

One solution the company recommends in its guide is to develop two demonstrators – one that ‘works like’ a real product and a separate one that ‘looks like’ a real product. Separating these minimises development time and cost, and yet still provides a start-up with tools to communicate the story to investors.

The ‘works like’, which typically uses standard development platforms, is not only a quick way to show functionality – it also demonstrates an understanding of the technical risks and how they will be addressed. Creating a ‘looks like’ model in parallel to this then allows investors to overcome the disbelief in something innovative and technically challenging, and replace it with the ‘wow factor’ of the potential opportunity.

Another useful technique is to produce a development risk assessment – this is often used by Cambridge Consultants to plan developments and make sure issues are addressed in the right order. This approach identifies all the technical risks and prioritises them. Those that are high risk but relatively easy to solve should be done first, while low-risk and high-effort tasks should get pushed back later in the development when the larger funding rounds have been secured. Investors will not expect a start-up to have solved all the challenges at this stage but they will expect a credible plan to address them moving forwards.

For more details on these approaches – and others – download a copy of the Bathtub to Warehouse guide from: www.cambridgeconsultants.com/b2w