How do start-ups raise money using the 70-20-10 Method?

You’re likely a founder who is always looking for the best way to raise funds.

The 70-20-10 Method is a great way to increase performance and transform your ROI. This Method is often used to outperform your competition by 10-20%.

Although it is often called the “rule of invention”, it is more of a guideline. You can adjust it to suit your startup’s needs.

So what is the 70-20-10 Method?

This is the formula Google uses to boost its innovation efforts. They allocate 70% of their resources and human capital to the core business, 20% to the new developments and 10% to disruptive innovations.

The Method generally focuses on the idea that 70% of learning is through experience, experimentation, and reflection. This is the type of work where you can get involved and learn the job.

20% of learning comes from working with other people, asking questions, getting feedback and coaching others. 10% comes from social learning with people you work with.

What does it mean for startups?

Research shows that startups are socially driven and self-driven. Therefore, it is important to have a balanced approach, with half of the learning being self-learning and half being social learning.

Although the Google method is more appealing to founders, let’s take a look at it a bit further…

70% Core Innovation

This requires you to critically examine your products and services, and make sure they are in line with your strategy.

Because core activity-focused innovation typically covers existing customers and processes, costs for increasing production or adoption tend to be lower.

20% Adjacent Innovation

Adjacent innovation is focused on a new market. You will need to adapt your startup’s product or service to meet changing market needs, no matter how successful it is.

You can stay ahead of the game by investing early but not fully focusing on it. This will allow you to offer more.

This doesn’t mean you have to come up with something completely new, but rather something that is relevant to the market in which you are operating.

10% Disruptive Innovation

Startup disruption is like breathing. You’re in the startup game because your idea is revolutionary and not yet in existence in your market.

As with adjacent innovation disruptive innovation is about being ahead of the curve and seeking to solve problems at the forefront.

The Benefits

Once you have the percentages right for your startup, you will start to see the benefits from implementing them.

You’ll discover the many opportunities for startups as you innovate the core of your company, the adjacent markets, and disrupt the market by bringing new ideas to the table.

With the focus, determination, and self-motivation that startups are best known for, your ROI will start to increase as you raise more money through bettering your current products or services and by staying ahead of the game with new ideas and markets you can enter.