They say ideas are a dime a dozen and venture is one of the spaces where this is undoubtedly true.
That said, some ideas are better than others.
How do you validate an idea and ensure what you’re working on is a real problem with scale potential?
While it’s possible to frame this as a process, the best founders do many of these things in parallel, not only for the pre-founding stage but continuously.
Define what good looks like
This might vary but most venture investors are asking very similar questions about the team, the business they are solving, and the market dynamics.
However, the way you define a good market opportunity might differ.
You might find a $5B market large while an investor might be looking for a $10B market. You might be seeking 20% growth rates while an investor is okay with 10%.
The way to define what good looks like is to research peers.
What are the market sizes and growth rates of commonly accepted large markets and use this as a benchmark?
Research, research, research
There’s a lot you can learn from the internet.
Look for reputable sources such as articles, reports, and podcasts speaking about the industry, problem, and solution space. You’d be surprised. If you find a founder in the space in another geography reach out to them.
Reach out to people who have tried to solve the problem before and start to validate your hypotheses. Between these, you can hone in on the solution and ensure
Run a trial
Now you know you’re in a big market and some of your initial hypotheses are true, go out there and run a trial.
Ask yourself what the most stripped-down, least tech-enabled version of your platform is, and use this to serve your users.
For example, if you’re in the agritech space, rather than giving users an app to order from, ask them to order via WhatsApp. Instead of creating an interactive menu, share a pdf. Instead of accepting digital payments stay cash only.
Focus on replicating the value without the product and record your results.
In this process, you will build up a knowledge bank that you can assess across industries as well as develop qualitative insights.
If you’d like to take this to the next level you can build out a framework to assess opportunities and include things like the size of the market, the size of the impact, the defensibility of the business, and more by assessing them just like a VC might.
Original post. Reposted with permission.