Introduction 

Startups are newly formed businesses that aim to solve real-world problems or meet emerging market needs through innovative products, services, or business models.

There are key characteristics that make startups distinct from other forms of enterprises. First, startups introduce new or improved products or services that disrupt existing markets or create new ones. Second, startups often venture into uncertain environments, navigating untested assumptions and rapidly changing market conditions. Third, no other form of enterprise strives for rapid growth and scalability, often leveraging technology to reach large markets, startups do. Lastly, startups operate flexibly, a characteristic that makes them adaptable and agile, iterating and pivoting quickly in response to customer feedback, internal learnings, or market shifts. 

Also, a startup could be a product startup, a social startup, or a tech startup. A product startup develops and sells physical or digital products, while a social startup addresses environmental or social challenges (social startups) often with a nonprofit or hybrid business model. Tech Startups, on their part, develop and commercialize new or improved technologies or technological innovations.

Whether it’s a product startup, social startup, or tech startup, startups innovate, create jobs, transform industries, and grow economies. 

But startups face immense challenges, one of which is funding—often requiring creative financing. Talent acquisition is also a big challenge for startups as they often have limited resources and struggle with brand recognition. Also, startups face regulatory-compliance issues across markets.

Based on our understanding of startups and the challenges they often face, we have developed the PARAGON Model for Startups. Our PARAGON Model for Startups is an evaluation  framework that can help startups de-risk their enterprises, improve their operations, and become more investment-ready. This way, we can support startups growth and development, fostering innovation, transformation, and economic growth and development.

The PARAGON Model for Startups

The PARAGON model is an acronym that represents the holistic framework for evaluating startups based on their Potential, Alignment, Risk, Agility, Governance, Operations, and Network. 

By assigning weights to each dimension, the model provides a comprehensive score that reflects a startup’s overall potential and investment readiness.

 

Dimension 1: Potential (P) – Weight: 20%

1. Potential (5 points)

• Large, growing market with clear demand (5)
• Moderate market size with some demand (3)
• Small or niche market with limited demand 1)

2. Product uniqueness (5 points)

• Highly innovative and unique product (5)
• Some unique features, but also some competition (3)
• Little to no unique features, high competition (1)

3. Team composition (5 points)

• Experienced, well-rounded team with clear roles (5)
• Some experienced team members, but also some gaps (3)
• Inexperienced team with unclear roles (1)

4. Founders’ vision, mission, and values alignment (5 points)

• Clear, compelling vision, mission, and values (5)
• Some clarity, but also some confusion (3)
• Unclear or misaligned vision, mission, and values (1)

Total Potential Score: ___________/20

Dimension 2: Alignment (A) – Weight: 15%

1. Business model clarity (5 points)

• Clear, well-defined business model (5)
• Some clarity, but also some confusion (3)
• Unclear or undefined business model (1)

2. Revenue streams diversity (5 points)

• Multiple, diverse revenue streams (5)
• Some diversity, but also some concentration (3)
• Limited or single revenue stream (1)

3. Cost structure scalability (5 points)

• Scalable cost structure with clear economies of scale (5)
• Some scalability, but also some limitations (3)
• Limited or no scalability (1)

Total Alignment Score: ___________/15

 

Dimension 3: Risk (R) – Weight: 20%

1. Regulatory risk (5 points)

• Low regulatory risk, clear compliance (5)
• Moderate regulatory risk, some compliance issues (3)
• High regulatory risk, unclear or non-compliant (1)

2. Financial risk (5 points)

• Low financial risk, clear funding and cash flow (5)
• Moderate financial risk, some funding or cash flow issues (3)
• High financial risk, unclear or insufficient funding (1)

3. Operational risk (5 points)

• Low operational risk, clear processes and systems (5)
• Moderate operational risk, some process or system issues (3)
• High operational risk, unclear or inadequate processes (1)

4. Reputation risk (5 points)

• Low reputation risk, clear brand and messaging (5)
• Moderate reputation risk, some brand or messaging issues (3)
• High reputation risk, unclear or damaged brand (1)

Total Risk Score: ___________/20

Dimension 4: Agility (A) – Weight: 15%

1. Adaptability (5 points)

• Highly adaptable, clear ability to pivot (5)
• Some adaptability, but also some rigidity (3)
• Limited adaptability, unclear or unable to pivot (1)

2. Innovation (5 points)

• Highly innovative, clear R&D pipeline (5)
• Some innovation, but also some stagnation (3)
• Limited innovation, unclear or non-existent R&D (1)

3. Resilience (5 points)

• Highly resilient, clear ability to withstand challenges (5)
• Some resilience, but also some vulnerability
• Limited resilience, unclear or unable to withstand challenges

Total Agility Score: ___________/15

Dimension 5: Governance (G) – Weight: 10%

1. Leadership (5 points)

• Clear, effective leadership with clear vision (5)
• Some leadership, but also some confusion (3)
• Unclear or ineffective leadership (1)

2. Board composition (3 points)

• Independent, diverse board with clear expertise (5)
• Some independence, but also some conflicts (3)
• Limited independence, unclear or inadequate expertise (1)

3. Shareholder structure (2 points)

• Clear, aligned shareholder structure (5)
• Some clarity, but also some confusion (3)
• Unclear or misaligned shareholder structure (1)

Total Governance Score: ___________/10

Dimension 6: Operations (O) – Weight: 10%

1. Systems and processes (5 points)

• Clear, efficient systems and processes (5)
• Some clarity, but also some inefficiencies (3)
• Unclear and inefficient

Total Score

Add scores from each section: _______/100

Interpretation

• 80–100: Excellent (Investment-ready)
• 60–79: Good (Investment-worthy, but requires some improvements)
• 40–59: Fair (Requires significant improvements before investment)
• Below 40: Poor (Not investment-ready)

Note: This scorecard is a standard model which may need to be tailored to specific startups and industries.

A PARAGON MODEL Roadmap for Startups

Potential (P)

1. Refine Market Analysis: 

Conduct in-depth market research to better understand customer needs, preferences, and pain points.    

• Milestone: Market research completed within 2 months
• Timeline: Month 1–3
• Resources: Market research consultant fees (estimated $…)

2. Enhance Product/Service Offering: Develop a minimum viable product (MVP) or refine existing offerings to better meet market needs.

• Milestone: MVP developed or product refinement completed within 4 months
• Timeline: Month 2–6
• Resources: Product development costs (estimated $X)

Alignment (A)

1. Develop a Scalable Business Model: Refine the business model to ensure scalability, efficiency, and sustainability.

• Milestone: Business model refinement completed within 3 months
• Timeline: Month 1–4
• Resources: Business model consultant fees (estimated $X)

2. Diversify Revenue Streams: 

Explore and develop additional revenue streams to reduce dependence on a single source of income.

• Milestone: New revenue streams identified and developed within 4 months
• Timeline: Month 2–6
• Resources: Revenue stream development costs (estimated $X)

Risk (R)

1. Conduct a Comprehensive Risk Assessment: Identify and assess potential risks, developing mitigation strategies to address them.

• Milestone: Risk assessment completed within 2 months
• Timeline: Month 1–3
• Resources: Risk assessment consultant fees (estimated $X)

2. Develop a Crisis Management Plan: Establish a plan to manage and respond to potential crises.

• Milestone: Plan developed and implemented within 3 month
• Timeline: Month 2–5
• Resources: Plan development and training costs (estimated $X)

Agility (A)

1. Foster a Culture of Innovation: Encourage experimentation, learning, and innovation within the organization.

• Milestone: Innovation initiatives launched within 3 months
• Timeline: Month 1–4
• Resources: Innovation initiative costs (estimated $X)

2. Develop a Flexible and Adaptable Business Strategy: 

Establish a strategy that allows for rapid adaptation to changing market conditions.

• Milestone: Business strategy refinement completed within 4 months
• Timeline: Month 2–6
• Resources: Business strategy consultant fees (estimated $X)

Governance (G)

1. Establish an Independent Board: Recruit 2–3 independent board members with relevant industry expertise to provide strategic guidance and oversight.

• Milestone: Board formation and first meeting within 3 months
• Timeline: Month 1-3
• Resources: Board member recruitment and compensation (estimated $X)

2. Develop a Shareholder Agreement: Create a comprehensive shareholder agreement outlining roles, responsibilities, and expectations.

• Milestone: Shareholder agreement drafted and signed within 2 months
• Timeline: Month 1–2
• Resources: Legal fees (estimated $X)

Operations (O)

1. Implement Efficient Systems and Processes: 

Develop and integrate streamlined systems and processes to enhance operational efficiency.

  Milestone: Systems and processes implemented within 4 months

• Timeline: Month 2–6
• Resources: System development and implementation costs (estimated $X)

2. Establish a Performance Management Framework: 

Develop a framework to track and measure key performance indicators (KPIs).

• Milestone: Framework developed and implemented within 3 months
• Timeline: Month 1–4
• Resources: Framework development and training costs (estimated $X)

Network (N)

1. Develop Strategic Partnerships: Establish partnerships with key stakeholders, including suppliers, customers, and industry experts.

• Milestone: Partnerships established within 4 months
• Timeline: Month 2–6
• Resources: Partnership development costs (estimated $X)

2. Build a Strong Network: Attend industry events, conferences, and networking sessions to build relationships and establish thought leadership.

    Milestone: Network established within 3 months

• Timeline: Month 1–4
• Resources: Event attendance and networking costs (estimated $X)

Investment Readiness Timeline

Based on the roadmap, XYZ is expected to achieve investment readiness within [X] months. The following milestones and timelines will be tracked:

• Month 1–3: Governance, risk management, and potential improvements
• Month 2–6: Operational efficiency enhancements, alignment, and agility improvements
• Month 4–6: Investment readiness preparation
• Month [X]: Investment readiness achieved

For our PARAGON Model for MSMEs, click here.