How to validate your Business Ideas

How to validate your Business Ideas

For most aspiring entrepreneurs, there is nothing more gratifying than that aha moment, when you discover that idea or solution that ‘can change the world’

But can it though?

The only way to truly answer that question is by validating your idea. If you can prove that your idea has worth beyond the bar napkin or sticky notes on which it is scribbled — the process gets much easier. By going through the process of validating your business idea, you can gain a deeper understanding of how your product does or doesn’t meet your target customers’ pain points.

The insights you gain can help you create an offering that not only addresses your market segment’s needs but shows potential investors that you can attract paying customers. In other words your business is viable.

Now that we have gotten your attention with the why, let’s move to the the how, by looking at the process of validation through three key steps

Articulating the goals, assumptions and hypotheses for your business is the very first step in idea validation.

Articulating the goals, assumptions and hypotheses for your business is the very first step in idea validation.

Start by asking yourself:

  1. What’s the value of my idea?
  2. Does something like this already exist?
  3. If it does, what makes my solution different?
  4. Who, do I intend it for and what premises can I or have I made about them?

This process will ultimately help you communicate the value and differentiating factors of your product, and illuminate assumptions and hypotheses you’ve made that are yet to be tested and verified.

Rating your idea

A great hack to find the value of an idea is to use a weighted scale. For example: (on a scale of 1 to 10, with 10 being the best possible score)

  • Investment Cost i.e the amount of capital it would take to build and launch the product/service.
  • Personal Interest i.e how optimistic and passionate you are about the prospects of this idea.
  • Potential Profit i.e how profitable the idea could be after launch.
The process of market validation estimates the target market’s size to identify the business’s potential, potential market share, and justify launch.

It asks several important questions, such as:

  1. Is there a market for the product as a result of your business idea?
  2. If there is a market, is it big enough?
  3. Are there people who are looking for the solution to the problem your product will solve?
  4. Are they willing to pay for such a solution?

Answering these questions can also help narrow what segments to target and determine where your product fits into the market and assess how much of it your business could own.

Research Search Volume of Related Terms

Another way to gauge market validity is to research the search volume of terms related to your product or mission. When consumers need a product or service, they often use a search engine to see what the market has to offer. Services such as Moz and can help indicate a demand for the product

Interviews with your target market segment can be an effective way to learn about your product’s potential.

This may include hiring a market research company to conduct focus groups, sending out an online survey, or having a conversation with someone within your network and asking questions like:

  1. Would you use this service or product and how often?What do you like about current products or services currently on the market?
  2. What do you dislike about current products or services currently on the market?
  3. What concerns/questions would you have about this service or product?
  4. How much would you pay for this service or product?

The answers to these questions should help you uncover your ideal customers’ jobs to be done and gain a deeper understanding of their purchasing behaviour. Organising your efforts around this core job to be done will allow your team to develop innovative product offerings and position your business for continued growth.

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Venture Capital Firm

How to validate your Business Ideas

D Global Ventures is actively using 23 technologies for its website, according to BuiltWith. These include Viewport Meta, IPhone / Mobile Compatible, and SPF.

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Partner/Principal Consulting At EY

How to validate your Business Ideas

Executive with a passion for advocating for and investing in people. I desire to facilitate opportunities for people to reach their highest potential.

Managing Director, Fidelity Investments

How to validate your Business Ideas

At Fine Structure Ventures, a venture capital fund affiliated with FMR LLC, the parent company of Fidelity Investments we focus on early stage investments in disruptive scientific and technological innovation.

Prior to this fund, I led investments in deep tech (AI, Robotics, Blockchain, Crypto, HPC, etc.) over 15 years for funds at Applied Crypto Ventures, F-Prime Capital, Eight Roads, and Fidelity Ventures.

I am a follower of the globalization of innovation and enjoy engaging with leading regional funds as an advisor: Pillar VC (Boston), Kae Capital(Mumbai), and Oui Capital (Lagos). This follows a long career as a technology entrepreneur, operator, investor, and dealmaker for over 20 years.

I frequently take on operating roles in startups, and in recent years, I have led strategic business development for startups like Tactai (haptics and virtual reality) and ownCloud (cloud file storage). Previously, I led business development efforts at RSA’s Data Security Division and drove the relationship that led to the $2.3B acquisition of RSA by EMC in June 2006 (largest tech deal that year).

I earned dual MBAs from Columbia Business School and London Business School; an MSEE from Clarkson University, and a BE in Comp. Engg. from Mumbai University.

Follow my analytical writings at or on twitter (@kamadoll)

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Managing Director, Foundry Group

How to validate your Business Ideas

Author of The New Builders – a look a the changing nature of entrepreneurship in America today. Available for pre-order now!

Financial and operations background – venture capital/private equity/corporate development/mergers and acquisitions

Specialties: Venture Capital/Private Equity
Corporate Development
Mergers and Acquisitions