68 CHAPTER ◆ 6 STAGE 0: The Money Document
quickly new ideas so that seed capital allocation becomes an objective process. Provision
of seed capital should be based on the merits of a strategy, not political power. The
Money Document forces consistency of purpose for the product team: building a new
profit center for the firm.
A benefit of a Money Document is that it ensures consensus between management
and the product team regarding the mission, goals, opportunities, challenges, develop-
ment costs, maintenance costs, ROI, time to market, and constraints of the project. Also,
it provides a foundation upon which to develop the remainder of the requirements specifi-
cations (i.e., while a Money Document is at a high level of abstraction, it can nevertheless
be viewed as a primitive incarnation of a Software Requirements Specification.)
Because trading/investment systems are housed largely in software applications and
tools, we sought inspiration for the structure of the Money Document in traditional soft-
ware documentation. From software development, the Vision and Scope Document for-
malizes business requirements. As such, it generally contains a list of specific capabilities
of the proposed software that will satisfy customer demands. In the case of automated
trading software, however, the saleable benefits are not those of the software itself, but
rather of the quantifiable performance of the trading/investment system it embodies. So,
we have also borrowed from the traditional Market Requirements Document which goes
into much greater detail about target markets, competitive advantages, and other issues
that pertain more directly to commercial success. A combination of these two applied to
trading/investment systems form the backbone of the Money Document, which in the end
should answer the fundamental question: is this a business worth investing seed capital
in? To wit:- How is the trading/investment strategy going to make money?
- Who wants the risk, that is, is there a demand for this trading/investment system?
- What will be the competitive advantage this system will have over the competition?
- How much money will be required to design and develop the system?
- How much profit will be generated?
- How much investment capital will the working system require and is it scalable?
(A Money Document is especially necessary for bottom-up innovations, where product
teams must sell their ideas to management or external seed capital providers. For top-down
innovations, a management order for a particular type of system may come with money
attached. However, teams should still complete a Money Document for purposes of clarity.)
As with all of the processes described in this text, we expect development of a Money
Document to be evolutionary. Even after the initial seed capital is granted, the Money
Document will continue to evolve since, at some point, it may be used for marketing or
to raise additional capital. A Money Document consists of three sections—the business
description, market analysis, and because it is after all a sales document, a request for
seed capital:I. Business description
A. Introduction
B. Description of the trading/investment system- Overview
- Preliminary research