We are fans of the lean development framework and tools like the Business Model Canvas. When we help with mentoring 1:1 we use the investment readiness level to gauge where a company is on the scale.
Investment readiness as a continuum, so we can help individuals wherever they are on the spectrum and give actionable advice to help them move on. investment readeinss on this scale has a parallel to the firms Technology Readeinsss Level. The Investment Readiness Level framework is a diagnostic tool to define their customer development process. The Investment Readiness Level provides a clear signpost to where someone is. In additional as a diagnostic tool it can be prescriptive too with regard to the stage of support needed and what the next step for the company should be. Therefore no matter where a firm is in its stage of development, the immediate next milestone – where the entrepreneurs should focus their attention next – is the next level.
History of the Technology Readiness Level
The Technology readiness levels (TRLs) is a method for estimating the maturity of a technology during its development phase. Projects are evaluated against the parameters for each technology level and given a TRL rating based on the progress of the project. NASA developed Technology Readiness Levels (TRLs) in the early 1970s as a means of assessing whether emerging technology was suitable for space exploration. Nasa explanation of TRL is clear.
There are nine technology readiness levels. TRL 1 is the lowest and TRL 9 is the highest.
When a technology is at TRL 1, scientific research is beginning and those results are being translated into future research and development. TRL 2 occurs once the basic principles have been studied and practical applications can be applied to those initial findings. TRL 2 technology is very speculative, as there is little to no experimental proof of concept for the technology.
When active research and design begin, a technology is elevated to TRL 3. Generally both analytical and laboratory studies are required at this level to see if a technology is viable and ready to proceed further through the development process. Often during TRL 3, a proof-of-concept model is constructed.
Once the proof-of-concept technology is ready, the technology advances to TRL 4. During TRL 4, multiple component pieces are tested with one another. TRL 5 is a continuation of TRL 4, however, a technology that is at 5 is identified as a breadboard technology and must undergo more rigorous testing than technology that is only at TRL 4. Simulations should be run in environments that are as close to realistic as possible. Once the testing of TRL 5 is complete, a technology may advance to TRL 6. A TRL 6 technology has a fully functional prototype or representational model.
TRL 7 technology requires that the working model or prototype be demonstrated in a space environment. TRL 8 technology has been tested and “flight qualified” and it’s ready for implementation into an already existing technology or technology system. Once a technology has been “flight proven” during a successful mission, it can be called TRL 9.
Putting funding into a progress framework
Businesses do not fail because they run out of enthusiasm or energy. They fail because they run out of cash, so funding is central to a firm’s life. So to have cash in a firm it needs to have cash-generative skills from sales or inflows from other sources which require that a company is funding-ready. For early-stage or smaller companies, their stage of progress can directly reflect their ability to access funding and investment. Steve Black developed the Investment Readiness framework to be to startups what TRL is to NASA. Below are the investment readiness levels; the higher the number, the more progressed the company has made and more attractive for investment.