Whether you plan to use your own money or work with investors, you need to validate your startup idea before you dive in with both feet.
Startup validation offers benefits that are too good to ignore:
✅Save money on product development, software development, and inventory
✅Validate your commitment to the startup
✅Better understand your target audience and start building relationships with them
In this guide, you’ll follow a 7-step process that leaves no stone unturned.
Plus, you’ll get examples of successful startups across a variety of business models and learn how to troubleshoot your idea if it doesn’t pass the validation stage.
How to validate your startup in 7 steps
Put your assumptions to the side. It’s time to validate your idea and see if it passes the test.
1. Gather your knowledge of the problem
The first step is to actually gather everything you already know about the problem you’re trying to solve, the industry you’re serving, and your target user.
This is super helpful because you’ll get everything out of your head (where information mixes with opinions). You can use a Google doc, a whiteboard, or post-it notes to start gathering your knowledge. If your startup has cofounders, make sure to get them involved.
Include:
Personal anecdotes
Pain points
Known struggles
Information from interviews you’ve already conducted
Any competitor or market research already done
2. Interview target customers
Now that you’ve put together your existing knowledge, it’s time to write an interview guide that you can use to interview target customers.
It’s good to use your existing knowledge to write the questions so your conversations will be deeper and more interesting.
This is all part of the shaping process, as Ryan Singer from Basecamp calls it. When shaping your problem, you go back to your target audience and continually refine what you know.
For example, if you know that your target audience struggles with organizing the web-based tools they use for work, then you might ask something like, “What do you do when you can’t find a tool?” This will ensure that your customer interviews are far more effective than if you were to just ask about their pain points at work.
3. Clarify the problem and opportunities
Next, use what you learned from your customer interviews to get crystal clear on the problem and opportunities. Write out the problem in a simple statement. For example, you could write something like, “Online workers struggle to organize their digital tools and tasks in a single place."
Then, make a list of the 3 to 5 related problems you’re going to solve, such as task organization, information discovery, and tool discovery.
Clarify where the opportunity lies and where competitors are falling short. For example, you might state, “Competitors only solve link saving and tab organization. The opportunity lies in creating a customizable dashboard that each person can use to organize all of their online tools.”
If you discovered multiple problems and opportunities that are too distinct to solve with a single product (at least initially), then you should go back to the interview stage. Talk with target customers again and get to the bottom of which problem is the most urgent and important. Keep shaping the problem and understanding it on the demand side until you feel confident that you’ve found something worth solving. It’s better to spend a few weeks at this stage—if needed—rather than rush forward with an unclear or unimportant problem.
4. Come up with workable solutions
The next step is to come up with feasible solutions. Gather experts who can help you. It’s really important to have product, technical, finance, and/or manufacturing experts on hand to keep the potential solutions grounded in reality.
At DevSquad, when we work with startup founders, we collaborate together in a Sprint Zero workshop, where we sketchup different solutions that could solve the user’s problem. We invite our CTO for technical expertise and our finance manager so they can assess the cost of the solution.
Encourage everyone to throw out ideas—no matter how outlandish—and have the development experts help wrangle the conversations and ideas. This way, you can quickly reiterate and refine concepts together as a team.
5. Choose the best solution and prototype it
Draw out the best 3 to 4 ideas on a whiteboard. For a digital product, draw out the main dashboard and UX. For a physical product, do you best to draw it and notate specific features or materials.
Keep talking through each of the solutions as a team until you feel confident moving forward with one of them. To help you choose the best idea, make sure it is achievable, that the initial version can be developed in under 6 months, and that it solves the core problem.
At this stage when working with startups, we present the information architecture and the best UX flow of the product. We then build a low-fidelity prototype with the UX of your product, but without branding.
Here’s an example of a low-fidelity prototype for a digital product. By not worrying about branding at this stage, we’re able to develop the prototype quickly and affordably so it can be shared ASAP.
If you’re building a physical product or equipment, you might be able to get a 3D model from the manufacturer, or at least a very detailed plan and drawing to show target customers.
6. Get feedback from stakeholders and users
Now it’s time to test your product prototype with target users or customers. Your goal at this stage is to get as much detailed information as possible. Allow your target users to explore the prototype and play around with it for a few minutes. Ask them what they think about it in an open-ended way.
Then, after they’ve had a chance to give you their unbridled feedback, dig deeper.
Here are some questions to ask when sharing your product prototype:
How does this differ from your current solution to this problem?
Would you pay for this product?
How much would you pay for this product?
Does it meet your needs, or would you still need to use a competitor or overlapping tool?
If it doesn't meet your core needs...what feature is missing?
What do you like most about this product?
What do dislike or find frustrating about this product?
How easy or difficult is it to use this product?
How often do you think you would use this product?
Can you think of any other people you would recommend this product to?
7. Analyze the feedback to validate or invalidate your startup
Now, you need to analyze your feedback
You can utilize AI transcription tools to create transcripts of your interviews and search common themes. Or, try a customer research analysis tool like Dscout or Insight7.
I recommend categorizing the feedback like this:
Positive Feedback: What do users like about your idea?
Negative Feedback: What issues or pain points do users experience?
Feature Requests: What additional features do users suggest? Which ones are essential for selling version 1?
General Comments: Any other observations or insights from users.
This will make it easier for you to visualize how much positive feedback you received and how much negative feedback you received. For really important questions (like would you pay for it? and how much would you pay?), you should use quantitative methods to track responses. Count the number of yes responses and no responses. Track the prices you received and average them out.
Based on this analysis, it should be easy to validate or invalidate your startup.
Below, we’ve made things even easier for you. If you can fit your concept into one of the business models below—and target users say they’ll pay for it—then you’ve got the green light to develop your startup.
4 startup goldmines to look out for when validating your idea
Just because you got great feedback from your target users, doesn’t mean you should go full steam ahead.
You should attempt to understand the unique type of startup you’re building before you dive in. Otherwise, you’re at risk of getting distracted or solving a problem that isn’t highly profitable in the long run.
Here are four different types of startups. If your idea is validated, you should be able to match it to one of these types.
The more user personas you’re able to help, the higher valuation your startup will reach. But remember—creating a solution for a single persona can still help you create a very successful lifestyle business that generates over $1 million in annual profit.
1. A recurring problem for one user persona
Many new startups solve one problem for one user persona, and that’s because many of the big, far-reaching ideas have already been developed.
Niche type: Vertical
Scope: Narrow
Example: Clearscope’s content optimization tool
2. A recurring problem for many user personas
If there’s a new type of technology available, many startups will rush to utilize it to solve a problem that happens for many different user personas, ultimately making their addressable market size much larger.
Niche type: Horizontal
Scope: Narrow
Example: Curator’s embeddable social media feed widget
3. A lack of cohesion for one user persona
You could build a solution that resolves a lack of cohesion for a single user type, such as one type of business owner or professional. By helping them consolidate their workflow, you’ll save them tons of time.
Niche type: Vertical
Scope: Broad
Example: DesignFile’s business platform for interior designers
4. A lack of cohesion for many user personas
Is there a horizontal type of work that is spread out and messy for just about every user persona? Then, you’ve got a startup with huge potential on your hands.
A word of warning: successful startups rarely start out this as this type of business. You should begin by solving one core problem, but if you can also foresee future expansion, that’s a great sign. For example, Mailchimp started with email marketing before expanding to other marketing channels.
Niche type: Horizontal
Scope: Broad
Example: Mailchimp’s marketing platform
What to avoid
Your startup should be able to fit into one of those business models above.
Even if your idea is validated, it’s not necessarily a good startup.
Make sure to avoid solving:
Occasional problems
Unimportant problems
Small problems
Recurring problems for overly narrow or difficult-to-define personas
What happens after the startup validation process?
After you’ve gone through the startup validation process, what comes next?
If the startup idea IS validated
At this stage, your number one goal is to bring the product to market as quickly as possible. That’s why it’s best to outsource development or manufacturing. A third-party firm will be able to develop your product faster than if you attempt to figure out everything yourself. As an added bonus, you’ll have more time to spend on sales and marketing.
Once your prototype is validated, you can move forward with SaaS development. Work with an agency that will develop your MVP in 3 to 6 months. At the maximum, it shouldn’t take any longer than 9 months to launch your product, and that’s only for complex builds that require intensive, custom features or AI integrations.
If you’re launching a consumer product or ecommerce startup, then the next phase would be to move forward with the manufacturer who produced your product prototype or choose a manufacturer that can offer better quality at a lower price.
If the startup idea IS NOT validated
If your concept was not validated, your next step should be to figure out where your solution went wrong, and
Here are some troubleshooting tips:
Wrong audience? - Is there another audience that would be more likely to purchase your product? If your startup validation process revealed that your target audience likes the concept but is not willing to pay for it, consider going upmarket or targeting a slightly different segment. Test your concept with a new audience (tweaking where necessary) to see if you can achieve product market fit.
Wrong problem? - When interviewing customers, did you discover a bigger, more pressing problem? If so, your startup will be far more successful if you tackle that. Whatever people are desperate to solve is going to be much easier to sell. Don’t be afraid to go after bigger, more challenging problems, as you’ll be rewarded for it, so long as the audience can afford your solution.
Wrong solution? - Maybe you’ve stumbled across a big problem, but your solution isn’t up to par. If your target audience confirms that you understand their pain points but isn’t willing to pay for what you’ve presented, then you need to adapt your solution based on feedback so it meets the mark.
Wrong price? - You should have worked with a technical expert and finance expert so you can gauge what price you’d need to charge in order to be profitable. If, during the startup validation process, you discovered that your audience isn’t willing to pay that price, you’ll need to adjust your solution to make it more affordable or see if there’s a different target audience that can afford your solution.
Wrong time? - If the product is simply not a high priority and doesn’t solve a super-pressing problem, now might not be the time to launch it. Maybe this current generation doesn’t care enough about the problem, or their budget is too tight, or the market just can’t bare extra expenses. Typically, you can tweak the solution, audience, or price and carry on—but sometimes, some products are ahead of their time, behind the times, or just not necessary right now. Be willing to walk away.
Frequently asked questions about startup validation
Get answers to the most essential FAQs on validating new business ideas.
What are the most common methods for validating a startup?
Customer interviews, competitor research, surveys, pre-order landing pages, and waitlist landing pages are the most common strategies for validating a product idea.
What metrics should I track during the startup validation process?
Keep track of your engagement rates on social media posts, conversion rates for waitlists and pre-orders, and the percentage of people who responded positively and negatively to various questions like whether or not they would use your product, whether or not they would pay for it, and whether or not would be a high-priority purchase for them.
What are the top pitfalls to avoid when validating a business idea?
When validating your startup idea, beware of confirmation bias, rushing the validation process, solving a small or unimportant problem, or relying too heavily on friends and family for feedback. You should also avoid validating the startup—but failing to validate your commitment to it. Are you the right person to head the company? Is now the right time? These questions are equally important.
How will I know if my startup idea is validated?
The truth is, there’s no single indicator that will give you ultimate confidence in moving forward. You should look for clear evidence of market demand, such as positive customer feedback, a willingness to pay, and pre-orders. The higher the percentage of positive feedback and the higher your conversion rates for pre-orders, the more likely it is that your startup will succeed.
17 ways to collect startup validation data
Do you want to do more thorough market validation for your startup? Then, you should collect more data during the testing and feedback phase.
Here are some of the best methods and data validation tools.
Competitor Research - Analyze competitors’ products, marketing campaigns, and social media followings to gauge market demand for better products and services.
Customer Interviews - Conduct interviews with target customers to gather insights on preferences, pricing, priorities, etc.
Surveys - Distribute surveys to collect quantitative data from a large sample of target customers using tools like SurveyMonkey or Typeform.
Focus Groups - Organize discussions with a group of target customers to explore opinions and gather in-depth feedback on product concepts.
Pre-orders - Create an order form or landing page to collect pre-orders. This will allow you to track real customer interest and willingness to pay while collecting much-needed revenue.
Email Marketing Campaigns - Use email campaigns to promote the product and track metrics such as opt-in rates, open rates, and pre-orders to assess interest.
Social Media Post Engagement - Announce your product on social media and monitor engagement metrics compared to other content to gather qualitative feedback.
Social Media Polls - Conduct polls on platforms like X (formerly Twitter) and LinkedIn to gather quick feedback on specific product features or preferences.
Social Listening - Utilize social listening tools and analyze discussions on forums like Reddit and Quora to understand customer sentiment and market needs.
Landing Page Analytics - Track metrics such as conversion rates and time on page for landing pages to measure interest and engagement. You can also use heatmapping tools like Mouseflow or Hotjar.
Product Reviews - Analyze reviews of similar products to identify potential improvements and validate market demand. The more complaints there are on your competitors’ products, the better.
Crowdfunding Campaigns - Launch a campaign on platforms like Kickstarter or GoFundMe to test market interest and secure funding before full-scale development.
User Testing - Conduct user testing sessions for digital products to gather feedback on usability and desirability. See how easy it is for users to understand and engage with your product. Then, enquire about their willingness to pay for it.
Prototype Showcases - Host events to showcase physical product prototypes and gather feedback from industry experts and target customers. You can do this with services like Veylinx.
Consumer Product Auctions - Organize auctions where consumers bid on your product to obtain real purchase data and gauge market demand.
Community Engagement - Build online communities around your product idea to engage directly with target users and gather continuous feedback.
Events and Parties - Host events to introduce your product concept, offer incentives, and collect direct feedback from potential customers.
Ready to validate and build your dream? Work with a partner that offers an effective validation process.
Learn more about our SaaS development agency.
