What Is Startup Validation?
Startup validation, or idea validation, is the process of gathering evidence that your startup ideas work. From a startup founder perspective, you simply want to confirm that you appeal to a large enough market, that your product or services will be appealing to your target market, and that they will be willing to pay for it.
There are some high-level validations that you can perform in the early stages of your journey; however, many of the aspects of your startup or startup idea can also be validated. You can validate that the problem you are solving presents a broad enough issue to the public (or niche groups) to warrant your solution. You can validate your product or service’s technology works as intended.. You can validate that a healthy market exists for that product or service.
Every piece of evidence that you collect to validate your startup ideas will instill confidence in you, your team, and your investors. The process of validating your startup idea can also provide you with invaluable insights on product development, messaging, marketing, and your business model.
Why Is It Important to Validate a Startup Idea?
Validating your startup idea (and validating your idea early) can be extremely important.
There are three key reasons to validate your startup idea. First, nobody wants to waste time and resources developing a product or service that the market is not willing to pay for. In validating your idea, you collect evidence that your startup idea might work, that you are solving a real problem, and that your potential customers will be willing to pay for YOUR solution.
Second, the process of validating your startup idea can be exceptionally valuable in developing the idea itself. In fact, validating your idea is a core part of the product development process and achieving product-market fit.
Third, validating your startup idea provides evidence for your potential investors and other key stakeholders. The more evidence you have that your startup idea is going to be viable in the market, the easier it will be to convince potential investors to invest in your startup.
Additionally, while validating, you will have the opportunity to collect valuable feedback and insights early on that can help shape your startup ideas into products and services that customers not only like, but love.
Steps to Validate Any Idea
Idea validation is a long-practiced scientific process that can be used to help you validate your startup ideas.
It is important to think about the overall steps to validate an idea before jumping ahead to the aspects of your idea you should validate and how to validate your ideas.
The steps to validate a startup idea, just like the steps to validate any idea, are:
Step 1: Define Your Goals
The very first thing you need to do if you want to validate your startup idea is to define your goals. Some questions to ask yourself would be: what do you know about your idea, the market, and your target customer? What do you need to find out?
You can think about your goals as the different aspects of your idea that need to be validated. You should also keep in mind that many of the aspects of your idea will be validated based on your own personal assumptions.
You can start by attempting to validate the assumptions that are most important to your startup idea and business model. To do this, you write down all of the assumptions that your startup idea relies on. Then, determine how critical each assumption is for your idea to succeed.
You have probably already made assumptions about each part of your business model. You assume you are solving an actual problem. You assume you will be able to produce a solution that can solve that problem. You assume your target market perceives this as a problem worth solving. You assume potential customers are willing to pay for your product or service.
Once you understand the assumptions you are making in pursuing your startup idea, you can prioritize which assumptions are central to your startup's success. For example, if you are entering the market with an innovative product or service, you may need to validate your assumptions that a market for your idea even exists at all. On the other hand, if you are entering an existing market, your most important assumption may be that your potential customers are willing to pay the price for your product or service, and your goal would be to validate your price.
Step 2: Develop Your Hypothesis
Once you have determined your goals and the aspects of the idea that you need to validate, it is time to develop your hypothesis.
Again, begin with your assumptions and goals to create a testable hypothesis, predicting whether the hypothesis is true. For example, let’s say you assume that the majority of people within a certain profession experience the problem that your solution is designed to solve. Your hypothesis might be, “More than 50% of professionals engaged in this industry have the problem that we solve.”
That’s it. You have a hypothesis that you can go out and test.
Depending on how you are planning on testing your hypothesis, you may want to develop more than one. If, for instance, you are planning on surveying or interviewing your target customers, you will want to use that time and resources to examine as many of your assumptions as you can instead of validating one point at a time.
Coming up with hypotheses is usually easy. The difficult part is figuring out how to test and analyze your hypothesis in a meaningful way. But don’t worry. We will be covering some of the ways you can validate your startup idea.
Step 3: Test Your Hypothesis
Again, once you have developed some hypotheses, you will need to test them. This may involve conducting research, identifying and asking your target customers, testing your product or service, or even building a prototype or Minimum Viable Product (MVP) to experiment with and gather information.
How you test your hypotheses will be largely determined by the aspects of your startup idea that you are seeking to validate. For example, if you are seeking to confirm that the problem you are solving affects your target market, methods such as customer surveys, interviews, and focus groups can provide you with invaluable insights. If you want to validate that your solution works, you may want to think about building an MVP and conducting usability testing. If you want to validate the price, you might consider a landing page MVP or A/B testing.
The point of validating your idea is to gather evidence to back up the assumptions you make in your business model and plan. The truth is, there are many, many ways to test your hypotheses and gather evidence. We will discuss more of the ways to examine your hypotheses later in this article.
Remember, when testing your hypotheses, collect as much information as you can. And when working with your target market, never miss a chance to ask for their opinions and feedback. Each interaction is an opportunity to not only validate your idea, but also to learn, build a product the market actually wants, and achieve that ever elusive product-market fit.
Step 4: Analyze What You Find
The final step in validating your ideas is to analyze and interpret what you find. However, analyzing and interpreting your assumptions is an ongoing endeavor when planning your startup’s business strategies.
There is no secret formula to measure whether your startup will be viable. In fact, in analyzing what you find, it is unlikely that you will find clear-cut answers to every question. The purpose of idea validation is to collect evidence and examine your ideas. Sometimes the evidence you find validates your assumptions, but other times it provides usable information to create a better course of action.
What Aspects of Your Idea Should You Validate?
You should consider validating as many aspects of your idea as you feasibly can.
Validate Your Fit
One of the first things you should validate when analyzing your startup idea is the fit between you and your idea. There are two important questions in assessing your fit with a startup idea:
- Is the startup idea a fit for you?
- Are you a fit to carry out this startup idea?
First, the startup idea has to be a fit for you. Launching a startup takes dedication and commitment. You, as an individual, need to be interested in and passionate about the idea. Second, you have to be a fit for the idea. You (and your startup team) need to have the knowledge, skills, experience, resources, and/or network to lead this startup to success.
To validate your fit, you will want to think about:
- Why do you want to build a startup? This startup?
- What motivates you?
- How passionate are you about your idea?
- Why are you the right person (team) to build this startup?
- What knowledge, skills, and abilities do you (your team) bring to this startup?
- What knowledge, skills, and abilities are you missing from your team?
And take the time to write down your answers. They are part of your startup history — the story you will tell your team, your investors, and your customers for years to come.
Validate the Problem
Another aspect of your startup idea that you should consider evaluating early is the problem that you are solving. Your startup idea is unlikely to succeed if you are not solving a real problem, the problem you are solving is minor or inconsequential, or if the problem doesn’t occur very often.
There are several questions to ask to validate the problem that you are solving:
- Is this a real problem?
- Who experiences this problem?
- Does your target market see this as an actual problem?
- Is this a big enough problem that it warrants solving?
- Is this a frequently experienced problem?
Validate the Solution
You might also want to validate your solution itself. Your solution needs to solve the problem that it was intended to solve for the market that it was intended to solve it for.
There are several questions to ask to validate the problem that you are solving:
- Does your solution work? Does it solve the problem?
- Is the technology developed?
- Does it do what it is intended to do?
- Can users figure out how to use it?
- Do they use it as intended?
Validate the Market
Another aspect of your startup idea that you can validate is the market for your product or service. You need to know who your target customer is, how many of them there are, and how big the market is to know if you are building a startup with a big enough market to scale and grow.
To validate the market, you will want to know:
- Who is our target market?
- What do our target customers look like?
- How do our target customers behave?
- How big is our target market?
- How many other firms compete in this market?
- What market share do they have? What market share do we hope to get?
Validate the Price
Another important aspect of your startup idea to validate is the price. You don’t want to charge too much that customers aren’t willing to pay, but you also don’t want to charge so little that you are leaving money on the table while squeezing your margins.
There are also several things that you will want to know to validate your price:
- What are your target customers paying now for a similar product or service?
- Where do your target customers find value in your product or service?
- What are your target customers willing to pay?
- Will your target customers accept your price points?
- Does this price point support your business model?
Validate the Messaging/Marketing
You also might want to think about validating your messaging or marketing. Your messaging and marketing needs to speak to your target audience and should clearly convey the value that your product or service provides for your customers.
To validate your marketing and messaging, try to answer:
- Are we reaching our target audience?
- Are we marketing where our target customers are?
- Does our messaging resonate with our target audience?
- Does our message reflect the value that our target customers care about?
Validate the Business Model
You can also work to validate your business model. All of the elements of your startup need to come together to support your business model. To validate your business model, look for evidence that your business model works, that customers will accept it, and that you are creating value for your startup and your customers.
To validate your startup idea’s business model, you will want to know:
- Does my startup idea’s price and positioning align and support my business model?
- Is anyone else using (or has anyone tried using) this business model?
- Does this business model create customer value?
- Does this business model allow you to earn ample profit?
- Is your business model scalable?
Validate the Investment
Finally, you need to validate the investment. Does your startup idea make financial sense? Validating your investment relies on validating your other assumptions, but it also involves assessing your startup’s revenue and return potential in light of everything you have learned thus far.
To validate your investment, you should think about:
- What is my startup’s revenue potential?
- Can we capture the market share that we assume?
- Will we grow at the rate we predict?
- Are our forecasts for costs and expenses accurate?
- What is the expected return on investment?
Ways to Validate a Startup Idea
Now that you understand the process of validating a startup idea and what you can validate, you are probably eager to learn about how to validate your idea.
How you validate your idea largely depends on what you want to validate. If your goal is to validate the problem, you can conduct interviews, surveys, and focus groups to validate the problem with your target market.
If you want to validate your solution, design, or technology, you may need to build a prototype or MVP and conduct usability testing.
Remember, validating your idea is simply collecting information and evidence to determine whether your startup idea is viable. There are many, many ways to gather your evidence. Here are some ideas to get you started:
1. Research Your Idea
One of the very first things you should do to validate your idea is to search the web. Even if your idea seems like it is cutting-edge, more likely than not, there are already several startups or companies trying to implement alternatives or similar solutions.
Begin by searching keywords and phrases that describe your startup idea. Try searching for alternatives or similar solutions by searching for keywords and phrases related to
- Your solution
- The problem
- The market
- The technology
If there are no competitors or alternatives, that may tell you that the problem isn’t worth solving, the market isn’t big enough, or that customers aren’t willing to pay what it would cost to solve the problem. On the other hand, if the market is saturated with competitors or alternatives, you may have a difficult time carving out a large enough market share to succeed.
Another way to find out more about the validity of your startup idea is to examine online search results. There are several tools available, like Semrush, Ahrefs, or Google Trends, to help you determine how many people are searching for a particular keyword or phrase each week or month. These tools can tell you to examine search volume, similar searches, trends, and how trends change over time, and they can be used to determine if people are searching for your solution or help with a problem that your solution solves.
And, don’t forget to keep track of what you find. An easy way to do this is to make a spreadsheet to record the websites you visit, information you find out about your customers, and even your competitors (which will come in handy later when you analyze your competitors, the value they provide to their customers, and how you can find your place in the market).
2. Ask Your Target Audience
Once you know who your target market and target customers are, you should go straight to the source as early as possible. Find your target customers and reach out to them. Ask them questions. Survey them. Gather feedback. Determine what they really need, what their biggest pain points are, and how you can develop your new product to solve real customer problems.
With this information, you can not only validate your idea but evolve your features, functions, and messaging to align with your target market's most important wants and needs. Listening to your target audience is one of the only ways to achieve product-market fit.
You can validate aspects of your idea with your target market in a number of ways, including online, email, phone, or in-person surveys, interviews, or focus groups.
Social media is another great place to connect with your target audience. Resources like Facebook and LinkedIn groups, forums, blogs, and other social feeds are great places to find your target audience, see what people are talking about, join in on the conversation, and ask questions.
3. Research the Industry and Market
Another great way to begin validating your startup idea early is to research the industry and market. You will want to pay attention to size, state, key drivers, and trends in both your industry and target market. You can’t validate your assumptions without understanding the size of the industry, the market, and your potential share of it.
To launch and grow a startup, you will need to understand the industry. How new or old is the industry? How rapidly do you anticipate the market to expand? What are the current trends in the industry?
Pay attention to recent innovations in the industry, the challenges startups in the industry are currently facing in developing new products, and how you could approach the problem from a different angle to set your products apart.
Where do you see your startup idea and business model in the future of the industry?
To scale and grow a startup, you also need to understand your market. When you research and understand the market for your new product, it becomes much simpler to determine the opportunities (or lack thereof) that are currently available, to design your products and services to meet the needs that are currently being expressed in the market, and to plan more effective sales and marketing strategies in order to reach the customers who are most likely to buy from you.
Can you find the size of your market? Who your most likely customers within this market might be? Information about your target customers? Your competitors?
4. Analyze Your Competitors
You can also validate your idea by analyzing your competitors. Analyzing your competitors can help you validate the problem, solution, market, price, and business model.
Not only should you be aware of the industry's level of competition, but you should also have a clear understanding of what your competition is doing. Only then can you better determine your new product's unique value proposition (UVP) and focus your efforts on developing a business strategy that will set your new product apart.
Determine who your competitors are and learn everything you can about them. You can learn a lot about them by visiting their website, subscribing to their mailing list, signing up for Google news alerts, and paying attention to their advertising.
It's a good idea to take a closer look at how your competitors are attracting new customers, their strengths and weaknesses, their target markets, and their business strategies. Begin by making a list of the things you want to learn or know.
An easy way to start is to record everything you want to know about your competitors in a spreadsheet. Try to understand and keep track of your competitors:
- Mission and Objectives
- Market Share
- Company Size
- Number of Products
- Target Market
- Value Proposition
- Core Features
- Additional Features
- Marketing Strategy
- Key Advantages
If you validate your idea and push ahead towards launching a startup, don’t forget to come back and check in on your competitors periodically. What you learn can provide valuable insights in building your startup, developing your product or service, and adapting to the market.
5. Build a Prototype
Another way you can validate your startup idea is by building a prototype. Prototyping is the process of creating a sample or mockup of your concept in order to learn more about it and gather feedback.
Prototyping is a stage of the new product development process that usually results in several iterations. Early stage prototypes might be as simple as a drawing, a storyboard, a product roadmap, or a plastic model of a product. In later stages, prototypes may get more complex, even approaching the functionality of a minimum viable product (MVP).
Prototypes can allow you to validate many aspects of your idea. What will your product or service look like? Can it be built? Is it technologically feasible? How will different aspects of your prototype work together?
6. Build an MVP (Minimum Viable Product)
Building from a prototype, you can also validate your startup idea by building a minimum viable product (MVP). An MVP is a product or service that has just enough features to attract some early-adopting users in order to validate a product idea as quickly and easily as possible.
Minimum viable products are just that, minimal. MVPs have minimal functionality, but they provide the opportunity to see if customers are actually interested in using or purchasing a product or service. Not only that, but building an MVP also gives you the opportunity to collect invaluable feedback to use during the development process.
By creating an MVP, you can get your product or service ideas into the hands of actual customers, get feedback, observe them using it, and learn more about your idea and how customers and potential customers might use it.
Nobody wants to spend time and money developing a product that no one wants. Because of this, many businesses create MVPs to test their ideas with real consumers and users before investing in the development of a "full" or "complete" product or service
7. Create a Landing Page
Another great way to validate your idea is a landing page, or landing page MVP. A landing page MVP is a simple type of low-fidelity MVP that lets you test your product or service ideas and messaging without ever having built a product or service.
Landing Page MVPs are typically one-page landing pages that describe what your product or service is and allow users to attempt to “buy” your product or service or sign up for more information. This is a great way to “offer” your product or service to actual customers, and it can help you decide if you should even build an initial version of your product or service in the first place.
To get the most value from your Landing Page MVP, make sure to capture as much feedback as possible. A “sign up” or email address alone doesn’t provide much-validated learning. Use your MVP to test different messaging, different pricing, etc., and make sure to follow up by engaging in actual conversations with some of the potential customers who signed up.
8. Organize a Crowdfunding Campaign
By now, you have probably heard of crowdfunding — raising small amounts of money from a large number of people to fund a new product, cause, or business. While you may think that the sole purpose of crowdfunding is to fund a project — whether that be a new product, service, or venture — crowdfunding can also be a great way to validate your startup ideas.
Crowdfunding allows you to describe, showcase, and pitch your product without ever having to build it at all. Many startup founders use crowdfunding to validate their ideas before spending any time or resources creating them.
Among the different types of crowdfunding, rewards-based crowdfunding is particularly appealing for validating your ideas. Reward-based crowdfunding raises capital while also allowing you to gain exposure, build awareness, and validate the problem, your solution, the market, your messaging, and your price.
Check out our review of the best crowdfunding sites for startups.
9. Conduct Usability Testing
Usability testing is another important tool in startup validation. Usability testing is simply testing a product or service with its target users.
Usability testing aims to answer two key questions:
- Whether your product will work as you planned
- Whether your product will actually solve your customer’s problems and meet their needs
This requires that you get your product in front of your target audience, test it to ensure that it works as intended, and solicit feedback from your target customers.
Product development, especially in digital products, often goes through several iterations, from prototype to MVP, to alpha testing, to beta testing, soliciting feedback from your users and target audience along the way, with usability testing conducted each step of the way.
Usability testing is especially useful for validating new or innovative products or product features, allowing you to validate your solution with actual and prospective users and customers. By getting your product into users' hands, you can observe and measure how they interact with it, identify issues, and gather feedback.
10. Conduct a SWOT Analysis
Another way to validate your idea is to conduct a SWOT analysis. A SWOT analysis is an analysis of your strengths, weaknesses, opportunities, and threats.
Identifying your strengths and opportunities, along with your weaknesses and threats, allows you to better understand and validate your startup idea and business model.
To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture. To uncover your startup’s SWOT, try to answer:
- What does your startup do well?
- What are your startup’s advantages?
- What do you do better than your competitors?
- What does your startup not do well?
- What are your startup’s disadvantages?
- What critical skills or abilities are you missing?
- What do your competitors do better than you?
- What needs to be improved?
- Where can you improve?
- Where can you grow?
- How can you capitalize on your strengths?
- How can you turn your weaknesses and threats into opportunities?
- Do the trends of the industry or market represent a threat?
- What does the competitive landscape look like?
- Do changes in technology or regulation threaten your success?
- Are your weaknesses a threat?