Customer Validation

How can I validate a pre-revenue startup through quantitative measures in addition to qualitative?

Adam Crabtree Founder, Strollbar

December 1st, 2015

How do I bridge the pre-revenue gap between qualitative insights garnered from potential app users via surveys, interviews, and focus groups on one hand and the quantitative measures necessary to satisfy the interests of investors looking to see hard data on the other? While the former is good for testing hypotheses and working through indicators for prototyping, iterating, and pivoting, I can envision investors wanting to see demonstrable data beyond potential users’ impressions, likes, and/or dislikes. I know each case is different, but as a general rule, are qualitative insights enough to pique the interests of investors? On the other end of the spectrum, aside from accumulating email addresses from potential users (as is often carried out through the landing-page approach) and aside from juxtaposing start-up intentions alongside industry reports indicating measures you think are attainable through your own development, how else can quantifiable data be utilized to demonstrate a convincing start-up idea? I understand that the work-experiences and qualifications of the start-up team are what investors are chiefly interested in at the seed stage, but viable data can’t hurt. I would just like to hear your ideas for ways to go about getting it.    


Many thanks!


Guita Gopalan Head of Customer Success at Stacck

December 2nd, 2015

1. Data from and about users
What insights went into the product development. Treat this separate from data about users that demonstrate an available market and that feed into your go to market/user acquisition strategy. These data are best presented in a story format - we did _______ because users are ______. or Because users are __________, we are _________. This gives investors an insight into how the startup team is thinking and strategizing and how you are executing based on learnings.

2. Can you acquire users and convert them into revenue generators? 
Depending on the investor, they may or may not be impressed with a giant list of potential users. Whether you have it or not, what you need to show is that you have an effective user acquisition strategy and that you are able to convert them into paying/revenue driving users. What's your conversion rate across the various stages of the user journey? How much time and effort did it take you to convert them? 
*If users use for free, then explain the behavioral level at which they become a user that gives value to the platform. i.e. facebook - if a user opens facebook 5 times a day thats a potential of 5 impressions for advertisers X XMillion users... 

3. Let your users convince investors
If you have users, let them be the ones to share how great you are through a video testimonial. 

Luke Szyrmer Forward-Thinking, Creative Software Product Manager and Author

December 2nd, 2015

Adam,

The landing page used as a minimum viable product is the ideal tool for exactly what you're after. The only way to know if your target market will buy your product is to actually try to sell it. Alternatively, you can pre-sell or just return their money if you aren't ready yet. Let me know if you have any more questions as I wrote a book called Launch Tomorrow on this exact topic. 

Luke

Edit: as some forum members have asked me where to find it, you can grab a copy with this link that redirects to your local country amazon: http://bit.ly/1Nz5oQf