How to validate your start-up idea

In this article, we'll walk you through essential validation steps to maximize the potential of your business concept.

1. Problem definition

First, you have to figure out what the main issue you are trying to solve is. Who among your potential customers is facing this problem and how painful it is for them? It's easy for founders to jump into solution mode right away, but it's crucial to resist that temptation. Thinking about solutions before fully understanding the problem is a common mistake, but it can hurt your chances of success. It can lead you to waste time, resources, and effort on developing products or services that don't effectively meet the actual needs of the target audience. After you confirm that you are solving the right problem, you should dive into how often this problem occurs – is it a one-time hiccup or a recurring headache (and how often does it occur)? It's crucial to understand if this problem is significant enough that people would actually pay to have it solved.

With our venture Tabu, we approached the problem definition phase by recognizing a critical issue: individuals lacked awareness of their market positioning in terms of salary compared to others, and companies were unaware of how their employees' compensation packages compared to those in other firms. This information gap proved to be a significant challenge, and we focused our efforts on developing a salary benchmark tool to address this specific need.

2. Market definition & research

Once you know what the problem is, it’s time to understand the market you are in. You need to research the Total Addressable Market (TAM) and create profiles of your ideal customers (ICPs). Market size directly correlates with revenue potential, attracting investors and allowing businesses to allocate resources efficiently. A larger market provides a broader customer base but can also intensify competition. In contrast, a smaller market may offer less competition but comes with a limited customer base, potentially constraining revenue opportunities. Knowing your market helps you make smart choices, create products that really click, and find your spot in the crowded market.

3. Solution definition

Now it’s time to consider the scope of your solution. You want to address the most critical issues first, determine what the minimum requirements to resolve it are, and be sure that potential users are willing to pay for the solution.

And risks? Every plan has them. You want to be aware of potential challenges or obstacles along the way and be ready for them. And finally, let’s talk about the vitamin or painkiller analogy – is your solution more like a gradual boost (like a vitamin) that adds value over time, or is it an immediate remedy (like a painkiller) that addresses a burning issue?

4. Unique selling point

After figuring out what your solution is, your next move is to outline why it's the go-to choice in comparison to what others are offering. Think about what makes your solution special—what gives it an edge over the competition? Are there features, qualities, or aspects that set you apart in a way that's hard for others to replicate? These are called "unfair advantages." And don’t worry, it doesn’t mean that you are playing dirty but rather showcasing what makes you uniquely awesome. They can be anything from cutting-edge technology, and domain expertise to a founder’s network.

Why is this so crucial? Because these advantages define your space in the market. They're the reasons customers would choose you over others. By listing and understanding these unfair advantages, you are essentially mapping out your competitive edge and making your mark in the market landscape. Make sure your solution not only meets expectations but goes above and beyond in ways that make it unique!

5. Competition research

In this step, you should thoroughly examine all potential competitors. Determine whether your idea or startup is a pioneer (the first mover) or an early mover in the market. Size up your competition – how extensive is it, and how well are they doing? Analyze their strengths, weaknesses, and everything in between to understand where you stand in the competitive landscape.

Here we can draw inspiration from SWEN, a property management system where we mapped out the entire hotel and camping industry in Croatia - everything from how many hotels and camps there are, and accommodation units they have to the management systems they currently use, and identifying their most significant pain points. This allowed us to tackle both market definition and competition analysis at the same time. We identified competitors’ strengths and weaknesses in comparison to our system, and gained valuable insights into the market landscape, setting our venture up for success.

Skipping competitor analysis can lead you to missed opportunities, unforeseen challenges, ineffective strategy, wasted resources, and potentially entering a saturated market without a unique value proposition, making it harder to attract customers.

6. Business model

While product development is the fun part, it's crucial to emphasize early planning for your business model and how you'll bring in the cash. We call this the "monetization strategy," and it's essentially the roadmap to turn your idea or service into tangible revenue. This step, while not as flashy, establishes the practical foundation for your venture's success. Consider it a necessary step to ensure your product not only impresses the customers but also has a clear path to financial sustainability.

Validation in action: how can Bornfight help you shape your startup story?

As your co-founder, Bornfight is committed to facilitating your startup's success, beginning with the crucial phase of idea validation. Our goal? To make sure both of us (the venture builder) and you (the founder) see the potential for your startup idea to evolve into a successful business. Leveraging our venture-building process, we oversee investments and set and monitor benchmarks, ensuring long-term success for our ventures. By doing this, we allow you, the founder, to focus on what you do best – drive the creative vision, refine the product, and steer the overall direction of the startup.

Here’s how we help:

Startup introduction & short info

We like to give startup owners, founders, and CEOs the opportunity to present their ideas as they see them. It’s not the same when we research on our own, or when we receive a pitch presentation — all that can give us a sneak peek, but the whole story and the idea behind the startup can be appropriately presented only by those who came up with it.

Co-founding team definition

Defining your co-founding team is crucial. Co-founders bring diverse skills and expertise to the table, complementing each other's strengths and weaknesses. It’s important to define your core team early on to ensure that you have a well-rounded skill set that complements each other. This is where we can support you in defining your core team by assessing skill sets, defining roles and responsibilities, and leveraging our network to connect you with experts and even potential co-founders in the industry. Everything you need to create a cohesive and effective founding team.

Making your validation process simple

As a venture builder, we're here to guide you through the practical steps of validating your startup idea. Our support includes best practices, valuable insights, and mentorship to ensure a thorough validation process. We keep it straightforward, and alongside you, we examine your concept with experienced experts who dig into market research, MVPs, and user feedback. We prioritize customer interviews because their insights are what really matters. By understanding their thoughts and needs firsthand, we can make sure we're creating something they truly want. Not every idea is a winner, so we provide a reality check to make sure you're not taking any unnecessary risks and offering services for an effective validation process.

Future outlook

After validation, we help you plan for the future because we want to make sure your startup succeeds in the long run. We help adjust your business model, refine operational strategies, and anticipate market changes. This includes setting short-term and long-term goals, guiding product development, and addressing factors like future hiring and cost projections. Our main goal is to support your startup's growth beyond the validation stage.

Finding your MVP (Minimum Viable Product)

We assist startups in developing a strategy for their solutions. This includes creating a prototype and collaborating on outlining a roadmap with clarity on milestones and decision points. We also encourage startups to define all possible features, considering how each addresses the problem for different user personas. Moreover, we guide you in prioritizing features, ensuring a focus on essential elements for the Minimum Viable Product (MVP). This helps you enter the market faster and allows for iterative improvements in later phases, optimizing the overall development.

Investment model

Bornfight's investment model will differ from the usual venture capital approach. We will allocate our investment according to the stages and KPIs that startups will achieve. Our intention is to fund founders from the point zero (problem-idea stage), through the development of a prototype and MVP, until the scaling phase. We will also leverage our investor network, and it will be possible for some of them to participate in the startup journey from the beginning. We will share the opportunities, and if there is mutual interest, they will be able to participate with funding in a certain stage.

And there you have it! 

These steps, guided by Bornfight as your co-founder, ensure your startup is not just an idea but a market-ready product. We’ve seen many ideas with huge potential and market opportunities go to waste because businesses went all-in on the first version and haven’t completed the valuation process the right way because they weren’t aware of what it looked like. By following these important steps and learning from experienced partners like Bornfight, you're not only safeguarding your idea but also setting the stage for sustainable growth and success in the competitive business landscape.

Ready to embark on a start-up journey with us? 

If you have an idea, tell us all about it!