We’re not going to bury the lead. The fact is, more than 50% of the time, the lack of Product-Market Fit (PMF) factors into the reason a startup fails. So we are putting in the work. We are going through our paces so that 1) we can identify our PMF and 2) in the process, better understand how to develop our platform in a way that empowers our customers, fellow founders, to find theirs – and do it faster.
This blog will share findings from our research, concept validation interviews, and our MVP prototype testing. We are sharing our process, not to give a progress report but to show founders some of the work needed to get to PMF.
Research Insights and Stats That Drive Our Purpose
With so much data at our fingertips these days, it is often the case that the amount of information isn’t the challenge; it is finding the right information. Therefore, we are carefully curating research from trusted, credible sources. Through this process, we are expanding our understanding of the potential market and building a knowledge center for our platform at the same time.
The amount of information isn’t the challenge; it is finding the right information.
Directing our early research was our mission: to build a platform that targets the earliest stages of entrepreneurship by democratizing access to the resources and knowledge that will accelerate growth and remove the most common friction points on a startup’s journey. In doing so, we intend to dramatically increase the overall number of startups and the probability of their success for new, diverse generations of founders.
Here are some of our findings that are informing how we increase the likelihood of success for startups:
80% of Seed-Funded Startups Fail, Top Reasons:
- No market need: 42%
- Ran out of money: 29%
- Not the right team: 23%
- Get outcompeted: 19%
- Pricing/cost issues: 18%
- Un-user-friendly Product: 17%
- Product but no business model: 17%
- Poor marketing: 14%
- Product mistimed: 13%
- Lose focus: 13%
- Disharmony among team/investors: 13%
- Pivot gone wrong: 10%
Top Insights Factoring in Failure:
- Product Market Fit factors in failure: 52% of the time
- Product Market Fit directly causes failure: 42% of the time
- Next two biggest pillars: Back-Office and Investor Relations
Democratized Access — Increase in Startups Per Year:
30%
if founders of all races found funding at the same rate as white founders
85%
if female founders found funding at the same rate as male founders
500%
if the top 3% of non-Ivy League graduates found funding at the same rate as Ivy League graduates
Early Interviews & Concept Validation
Our early work started with 53 interviews targeting first-time and serial founders as well as VCs.
Founder Breakdown
- First Time Founders: 14
- Serial Founders: 22
- VC Partners: 17
- SVB Customers: 20
Founder Breakdown
- First Time Founders: 15
- Serial Founders: 47
- Male: 59
- Female: 3
We prepared four-slide storyboards to present 22 product/service concepts and asked subjects for feedback on three. They would describe the concept in 1-2 sentences, rate it on a scale of 1-10, explain who would use it, and provide any changes or additions.
Based on how often they were mentioned, these interviews highlighted some of the most common pain-points associated with creating a company. Identifying customer pain points is critical to developing a product that creates value by meeting a need.
Pain-Point Mention Frequency (VC Personas)
- Analytics: 24%
- Fundraising: 16%
- Investor/Founder Alignment & Trust: 16%
- Leadership In/Experience: 16%
- Mentoring Network: 8%
- Recruiting/Vetting: 8%
- Team: 8%
- Learning: 4%
The services pitched can be broken down into categories for Backend Services, Coaching, Tracking, and Community (Ecosystem). Here are the most tested and most favorably rated services:
Most Tested
- COMMUNITY — Platform to obtain direct feedback from decision-makers based on user criteria selected
- Impact: Product-Market Fit
- Rated 8.3 out of 10
- BACKEND SERVICES — Solution to automate backend services for startups
- Impact: Back-Office
- Rated 8.1 out of 10
- TRACKING — A solution to utilize AI to guide and understand the impact of startup decisions based on choices
- Impact: Investor Relations
- Rated: 5.7 out of 10
- COMMUNITY — A platform to track, manage, and guide users’ startup journeys from ideation to business creation
- Impact: All
- Rated: 9 out of 10
Most Favorable
- TRACKING — A platform to track, manage, and guide users’ startup journeys from ideation to business creation
- Impact: All
- Test Frequency: High
- BACKEND SERVICES, COMMUNITY — A marketplace for backend services for startups allowing users to select services from vetted partners based on individual needs
- Impact: Back-Office
- Test Frequency: Medium High
- COMMUNITY — Platform to obtain direct feedback from decision-makers based on user criteria selected
- Impact: Product-Market Fit
- Test Frequency: High
Early MVP Prototype & Customer Validation
Our initial MVP prototype centered on the StartupOS onboarding experience and one of several to-be-designed PMF modules – the Value Proposition Definition. Beyond the initial prototype, we intend to leverage the customer validation interviews to help us narrow in on essential follow-on MVP deliverables. While our primary validation target was first-time pre-A founders who were in the midst of MVP design-build or who had already completed their MVP, we opportunistically included a few serial founders in the mix. We also included two (2) co-founder teams on the same call to gain insights that might further inform our thinking.
Learning: Diversifying Our Interview Pool
An essential characteristic of a great founder is self-awareness. Pausing to reflect on your efforts can be immensely powerful. For us, we recognized that to accomplish our mission of democratizing access, we needed to diversify the types of founders we were talking to. As an example, going forward, part of our research strategy is to ensure over 50% of interviews are based outside of the San Francisco Bay Area to ensure we are building a product that addresses the needs, preferences, attitudes – and that is accessible – to a broad range of founders.
Total Number of Startup Founder Interviews: 18
- San Francisco Bay Area: 3
- Los Angeles: 2
- San Diego: 1
- Seattle: 1
- Cincinnati: 1
- New York: 3
- Indiana (South Bend): 1
- Toronto: 6
- First-Time Founders: 13
- Serial Founders: 5
- Male: 13
- Female: 5
As we continue to develop our platform to support founders, it is exciting to watch our progress from two angles. Building, testing, and learning for us is not only helping us get to Product-Market Fit, but it’s allowing us to refine the process and identify ways to streamline it, which then gets integrated back into the product. It’s a virtuous circle!
