How can you find underserved niche markets for your startup?

As a Venture Capitalist, I always look for startups that can leverage existing resources to their advantage. When I see a startup using platforms like Amazon, Reddit, or Facebook to identify underserved niche markets, it tells me they are resourceful and strategic. Tools like Jungle Scout and BuzzSumo, which analyze market gaps and trends, demonstrate a data-driven approach. This ability to harness existing platforms shows me that the startup has the potential to scale efficiently and adapt to market changes, which is crucial for a successful investment.

Teams that methodically build, test, and learn in fast loops outperform those that aimlessly build. A key concept is to not spend too much time building prior to validating whether there is demand (note - this is general advice, not applicable in every case.) Nothing is more of a drain than spending months building for a niche that has no interest in your product. During a Design Sprint teams build a mock-up of a prototype and then test it with 5 customers the following day. Compressing your learning loop into a week, or several weeks, is a great strategy to quickly evaluate the reception of your product in niche markets.

You should have some understanding of what problem your startup is solving, this is step #1. In terms of finding your niche, it can be broken down into: - How big/common place is the problem your solving? - what is the market size ( break it down to TAM-SAM-SOM). * once you do the above you should narrow down your Go to Market strategy ( GTM), which in other words is the low hanging segment of your SOM who would most likely come on board as first customers, this could prove to the “niche market”, you’re looking for.

When I began investigating possible niche markets, I understood the enormous benefit of utilizing current platforms with sizable user populations. When I was seeking an untapped market for a new product, I used websites like Amazon and Reddit to get an understanding of what people were talking about, looking for, and showing interest in. Using tools like Jungle Scout, Keyword Tool, and BuzzSumo, in my experience, helped us to methodically evaluate the data and pinpoint market gaps. On these forums, we were able to identify patterns, unmet requirements, and growing debates that allowed us to identify market niches with high demand but little supply.

Startups can also leverage platforms like ProductHunt, Appsumo or similar affiliate sites to launch their products and get users to try out their products in exchange for valuable feedback. Most of the times, you will find very interesting and varied uses of your product especially on platforms like ProductHunt. Try to engage with as many users as possible in a 1-1 fashion or if the volumes are too large then using a survey tool to identify what motivates them to use your product in the way they do and what value do they get by using it. Once you have built a sizeable cohort of similar user types, you know there is an underlying and unmet need that your product can fulfil.

I have found that despite any utility that you envisage for your products, customers will always find innovative new ways to use the solution or products that you provide. Whilst there are a bunch of tools available to harvest this information from the web, they rely on a level of volume that your startup may not yet have reached. This makes direct communication with your customers absolutely vital - whether it’s sending an automated follow up to ask what they use your product/service for, or even offering a small inducement (one months free service or a voucher) for this information - you will find a new route to market and competitor insight along the way.

Customer feedback is key to both evolving current offerings and finding adjacencies / new markets . Outside of the key target, there are interesting learnings from the rejectors and the hackers. Mining feedback for rejection reasons can determine if there are customers you are leaving behind because of an achievable unmet need and if the signal is large enough to warrant developing into that need. The hackers who are either using your solution differently or creating work-arounds can expose the next level features for the next evolution. Overall, the key is closed loop action on feedback that allows for identification of trends and rapid iteration into testing potential of the underserved niches.

Customer feedback is the lifeblood of any successful business. When a startup actively engages with its customers using tools like SurveyMonkey, Typeform, or Google Alerts, it signifies a strong commitment to understanding and meeting customer needs. Analyzing feedback to find common themes and pain points shows a level of sophistication that I, as a VC, find appealing. It tells me that the startup is not only in touch with its market but also capable of evolving based on customer insights. This customer-centric approach often leads to higher retention rates and sustainable growth.

To listen, to empathise and to understand consumer feedback and their experience will help you to innovate, perform and to become a more profitable organisation. There are a significant amount of tools that you can utilise to measure and analyse your user experience and identify common themes, frustrations and also the positives!

Once you are found your niche market, you need to identify how this is different from the existing markets. Is it convenience, a physical location and on-line access for customers to search and buy, level of service, inventory and relationships with customers. These should all be advantages to your customer base. Also, do mystery shopping to determine how your c competitors do the above. This is a good way to get accurate information on your competitors' business.

The 80/20 rule, or Pareto principle, is a principle I often apply in my investment decisions. When a startup uses this rule to focus on the most profitable segments or essential features of their product, it shows a clear understanding of efficiency and prioritization. Tools like Google Analytics and Hotjar that track customer behavior and satisfaction are indicative of a data-driven strategy. This focus on key areas tells me that the startup is capable of maximizing returns with minimal effort, a trait that often translates into better financial performance and risk management.

agreed, the more they dig out the more in the digital marketing world, lik AB Tasty, from France...and others Sales Enablement solutions like MindTackle. it helps, but make sure they have a quality data base, otherwise even apply 20/80 rules, garbage in, garbage out.

I've founded two startups in underserved niche sectors. My inspiration originated from reevaluating existing issues through various lenses. I asked myself, is there a novel approach to address this issue? How can I adapt tools already in use in other industries to a completely different market segment? Frequently, groundbreaking solutions can open up untapped markets. Creativity can also be fueled by experimenting with new technologies in traditional sectors, or by scaling a small-scale solution to fit a new market context. An important factor is to consider existing product 'substitutes' (ref M. Porter's model) which offer a fresh perspective on the real needs and, consequently, on potential new solutions.

Innovation and flexibility are key traits I look for in a startup. When I see a company experimenting with different angles and approaches using tools like Lean Canvas and Google Trends, it shows a willingness to innovate and adapt. This ability to think outside the box and test different aspects of the product, such as customer segments or revenue models, is a strong indicator of a startup's potential to thrive in a competitive market. It tells me that they are not afraid to take calculated risks, a quality that often leads to breakthroughs and success.

Buy several influential well-connected people lunch and learn from them. You can use tools to learn, and you can learn even more in interpersonal relationships.

Remember in 1989, when I worked for HP Canada in Sales, we went into a War Room on Friday afternoon, using exactly what you described on strategic deals.

The key is to identify the 20% of your efforts that will yield 80% of the results, and this principle can guide your decision-making as you explore and serve underserved niche markets. Applying the principle can help you: - Direct resources where they matter most, tailoring your approach to the niche's needs - Identify segments driving most profits - Develop features addressing niche pain points, boosting relevance - Craft unique offerings, fostering customer loyalty and setting you apart - Niche targeting speeds up product validation through precise feedback - Niche markets are less crowded, enabling differentiation - Satisfied niche customers spread the word, aiding organic growth.

Analyzing and learning from successful examples is a sign of maturity and strategic thinking. When a startup uses tools like Crunchbase, AngelList, or SWOT Analysis to study successful peers, it shows a commitment to continuous learning and improvement. This willingness to learn from others' successes and failures tells me that the startup is grounded and realistic about its goals and the challenges ahead. It's a quality that often correlates with long-term success and resilience.

When you find potential niche markets for a startup, it's essential to consider your personal excitement towards it. In the early stages of a startup, there can be many ups and downs, and it's important to work on something you feel engaged with or believe in the bigger picture.

Guide your search through data-driven hypothesis-driven problem solving: Hypothesis Formulation: Craft hypotheses about gaps in the market based on trends and observations. Data Collection from Diverse Sources:Leverage Google Trends for search insights.Utilize social media analytics to track discussions.Gather customer viewpoints and comments on relevant websites. Data Analysis:Analyze data to confirm or challenge hypotheses.Uncover recurring patterns, emerging behaviors, and unmet needs. Segment Identification:Categorize your target audience by demographics, behaviors, and interests.This method validates underserved niche markets through data analysis, allowing tailored solutions to address specific needs.

The collaborative and inclusive approach mentioned in the article resonates with my philosophy as a Venture Capitalist. Engaging with the community and being open to continuous learning and improvement is a sign of a healthy and progressive startup culture. It's an indicator of a leadership team that values diverse perspectives and is committed to growth.

I believe innovation is often not about more of more... in almost every market there is a group of consumers that want less, cheaper and easier. I regularly recommend start-ups look at the overserved to identify opportunities for disruptive innovation.

Data and research provide valuable insight, and networking with super-connectors and business owners directly deepens that insight. Some niches are visible in the data, and other niches come out in conversations. I find time to start servant leadership GiveFirst networking conversations on LinkedIn. Sure I can automate the first round but then I continue the conversation manually and even take it offline to phone and video calls. In order to get valuable time even from super-connectors who network almost constantly for work, I have to bring something of value to the conversation. Sometimes I have to dig in the conversation to listen to what they are sharing and show interest in them in order to find the value I can bring.