LEXIS-NEXIS® Academic Universe

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LEXIS-NEXIS® Academic

September 01, 1999

LENGTH: 316 words

HEADLINE: CREDO introduces new economy' mode

BYLINE: Andy Thomson

BODY:

As more non-specialist venture capitalists seek to capitalise on the growth opportunities offered by new media, e-commerce and the Internet, many are realising that they lack the appropriate tools to evaluate such new economy' businesses.

Recognising that traditional models such as Porter's five forces' are of limited relevance when it comes to assessing the complex and rapidly changing web of supplier/partner/customer relationships in these high-growth areas, growth company consultancy CREDO has developed an analysis model specifically tailored for new economy' propositions.

The conventional approach to company assessment is based on discrete analyses of the company and market. This approach cannot be usefully applied to a business which, by its very act of growth, is creating a new market. "Because for many e-commerce and Internet ventures it is not possible to assess the market in isolation, the old map is useless," says CREDO director Phil Rance. "Traditional due diligence consists largely of looking for gaps, which, when dealing with a new economy model, is pointless. Instead, the CREDO Yardstick aims to identify whether a gap is a killer or whether it is addressable."

The CREDO Yardstick reunites market and company assessments. As such, director Tom Coates says, the tool also has applications for assessing conventional businesses where there is no pre-existing market.

The Yardstick, which hinges on qualitative rather than quantitative analysis, uses a simple scoring system to balance eight principal drivers of value against eight key risk factors. Key areas in which CREDO believes the Yardstick can add value are the identification of growth hot-spots' within a developing market and of mechanisms to capture value. However, Rance stresses that use of the Yardstick is always underpinned by solid analysis following more traditional models.

LOAD-DATE: September 17, 1999