Diligencing the Demand
In diligencing the demand for a startup’s product, here are some key points to check:
Is the product a nice to have or a must-have?
For customers buying the product, assess their budgets. Do they have deep pockets, or do they have average pockets?
Assess their place on the technology curve. Do they lead the way, or do they follow the masses?
Ask similar companies what they think about the product and if they would buy it. If no, ask why?
From this information, you gain an understanding of how well the product works and how customers view it for their business.
You can then estimate the serviceable market size for the product.
Contact existing customers and ask about their need for the product and how well it works for them.
This is particularly important for freemium products in which the user is not a paying customer.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.