At the end of our three-month enterprise programme, Balloon ICS, entrepreneurs can pitch for a loan to support the implementation of ideas they have developed during their time with Balloon Volunteers. These pitches are evaluated by a panel which includes volunteers, Balloon staff and members of the community (e.g. partner organisation staff).
During the pitch, the panel scores them on various criteria, assessing everything from the demand for their product or service to the entrepreneur’s skills and knowledge. We also ask the panel to provide an overall rating of the entrepreneur.
In this two-part blog, we have analysed this data to answer two key questions:
- What do our panel’s evaluations reveal about our entrepreneurs?
- Is there any hint of biases in panel evaluations?
What do our panel's evaluations reveal about our entrepreneurs?
Of the twelve criteria assessed by our panel, one is consistently scored much higher than the others: whether people want to buy the product or service the entrepreneur is offering.
We are especially pleased this made it to the top of the list!
One of the core elements of the Balloon ICS programme is helping entrepreneurs to test demand for various products/services so they can make strategic choices about what to sell based on knowing what customers want, rather than guessing.
This finding suggests that at the point of pitching, the Balloon process has helped entrepreneurs ensure they are selling products or services that people actually want. All too often we find entrepreneurs who are struggling because they are selling things that no one wants.
There is also a criterion that entrepreneurs are consistently rated low on: whether their idea is difficult to copy by competitors.
This is somewhat expected due to the copycat culture in the informal sector. In these countries, the default strategy for starting a business seems to be copying another successful entrepreneur’s idea.
This is problematic because it means that everyone is competing with everyone else! The inevitable price war means that entrepreneurs do not make a lot of money. It’s something we have tried to work on through our curriculum and training (for example, trying to get entrepreneurs to start unique businesses) but clearly, there is more work to be done in this area, even if it is a difficult cultural change to affect.
A final interesting point is on the difference between start-ups and existing businesses. We have assumed that it must be tougher for a start-up to convince our panels their idea is worth supporting financially. Now, we have some evidence for this as well. On five of the 12 criteria there are statistically significant differences between start-ups and existing businesses, all in favour of existing businesses:
|People want to buy the product or service the entrepreneur is offering||3.90||4.26||0.36|
|entrepreneur’s business/proposed idea sets itself apart from competitors so that customers are likely to choose this business over others||3.14||3.66||0.52|
|Based on and your observations at the pitch, the entrepreneur has the required characteristics to be a successful entrepreneur||3.71||3.98||0.26|
|Threats or potential shocks to the business are limited or clear plans are in place to manage these risks||2.95||3.51||0.56|
|The entrepreneur can repay the loan within twelve months, taking into account costs of the business and any salary or personal expenses||3.38||3.98||
However, interestingly, there are no significant differences between overall ratings, so this does not massively worry us. It suggests there are some specific areas start-ups struggle with (probably because of lack of experience) but overall this does not hold them back.
As part of our constant monitoring and evaluation process, through which we try to improve every aspect of our work and its impact, we’ll be looking to focus more on the areas we know start ups struggle with.
Come back next week to read the second part of this blog, where we will be looking in more detail at our pitching panels, and trying to evaluate whether or not they demonstrate any bias in their selection.