Business

New technology businesses usually face two hurdles to get their product to market.  The first is proof of concept.  The second is proof of scale. 

Both are intended to solve the “Ability” stage of the business plan process and move the business into the "Meeting" stage:


Proof of concept is simply the proof that the business can develop a working prototype that solves the market opportunity issue.  For a software licensing company this will be development of a bare bones software program, usually without user interface design or additional back end functionality.  It solves the most basic questions of whether the contemplated design will meet intended functionality. 

Proof of scale is the initial to-market phase that proves the business can scale the technology (or good or service) to satisfy the market opportunity at a profit.  Some of the issues to address at this stage include:

• Adequate capital
• Quantifiable customer demand
• Number of sales force required
• Adequate supply chain (in terms of cost, quality and time)

After proof of scale is satisfied, a business is usually in a more stable mode with its product (or service) satisfying the market opportunity at a profit.

As an entrepreneurial law / SaaS law attorney, I have helped several clients work through these and many other issues in the “proofs” stages.  I find that few business fail to address the proof of concept stage well, but many ignore issues in proof of scale.  One of the key issues to address early is quantifiable customer demand for YOUR product as many of the other issues spring from this one.



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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.