What are the best ways to validate your value proposition before pitching to investors?

Cuando estás emprendiendo, hay muchísimo más espacio para las incógnitas y suposiciones que para las certezas. Por tanto, a lo largo del recorrido del proyecto, es necesario plantear hipótesis de todo tipo y tratar de alcanzar respuestas a las mismas. Las primeras incógnitas suelen ser si el problema que estamos intentando solucionar realmente es un problema que hay que solucionar a alguien y quién es ese alguien. Pero, tras esas primeras hipótesis vendrán muchas más sobre funcionalidades, mercados, precios, etc. Trabajar sobre la validación constante de hipótesis buscando el aprendizaje es una forma de enfocar el día a día muy necesaria cuando estás emprendiendo.

To validate your value proposition before pitching to investors, start by clearly defining your hypothesis. Create a Clear Hypothesis: Formulate a concise statement that describes your value proposition, target customer segment, the problem you're solving, and your solution. For example: "Busy professionals need a quick way to order healthy meals, and our app offers personalized recommendations and delivery options." Base on Initial Research: Ensure your hypothesis is grounded in preliminary research and reasonable assumptions about your market and customer needs. Make it Testable: Frame the hypothesis in a way that is testable and falsifiable, allowing you to validate it with real-world data before approaching investors.

One great way is to practice your pitch on other founders. Especially ones who are futher along in their journey than you are. Founders love to help other founders as they recongize how hard it is to build and raise capital. They can be a great source of truth for you in the early-stages before you pitch any investors. They can also be a path to actual investor conversations for you.

Unlike most consumers, entrepreneurs see the world through a unique lens: recognizing (if not actively looking for) problems & inefficiencies and being inspired to solve them. Hypothesis and assumptions are the starting point. However, every concept has a limited shelf life and all ideas are fleeting. Before investing time (and money), it's absolutely critical to comprehensively evaluate the market & competitive landscape to see if anyone else is addressing it — and if another idea can significantly do it better.

It’s important to ask open ended questions so that they ramble and go on tangents about what they really care about. Hopefully they bring up a variety of pain points so that you can start ranking your solution on the list of solutions they are looking for.

Always ask yourself if you really truly know who your ICP is in the early days. You may have a problem you want to solve and an assumption of the ICP but one thing to consider it testing multiple ICP profiles against the problem. You may just find who you thought your ideal customer wasn't just isn't.

Set the hypotheses and test them out on the market. If you have real customer data, validated hypotheses, and potentially even sales, investors might take your proposal more seriously. Give them the hard evidence and they will pay attention.

There are several landing page platforms where you can spin up a one-page website for free, or for very cheap. But you can't test a landing page if you don't have traffic. The real value prop test happens during the prior conversion step - what did your potential customer do prior to visiting your page? Google Ads, Facebook ads, links within blog posts - this is where you can test (and A/B) your messaging, which is then reinforced on your landing page. As with any experiment, know what your success and failure metrics are prior to getting results. Otherwise, confirmation bias may cause you to go down the wrong paths.

To validate your value proposition before pitching to investors, run landing page tests. Create a simple website showcasing your value proposition and invite visitors to sign up for more information or a trial. Measure interest and demand by tracking traffic, conversions, bounce rate, and feedback. For example, launch a landing page with the message: "Order healthy meals online in minutes with our app. Get personalized recommendations and delivery options. Sign up now and get 50% off your first order." Analyzing the results helps determine if your value proposition is compelling enough to attract leads and customers, providing data to support your pitch to investors.

In my experience, creating an MVP using a low or no code solution is an option available to everyone today. You don’t need for it to be perfect, you just need something against which you can gather feedback. The more your product is rooted in your vision but build based on feedback, the more lucrative your iterations will be.

Building a minimum viable product (MVP) is essential for validating your value proposition before pitching to investors. Create a Basic Version: Develop a simplified version of your product or service with the minimum features needed to deliver your value proposition to users. Test with Real Users: Use the MVP to observe real user behavior and gather feedback on how they interact with your solution, the benefits they receive, and any problems they face. Validate Value Creation: Determine if your MVP effectively solves the problem and delivers value to your customers, helping you refine your offering before approaching investors.

Go beyond demographics and gather in-depth insights through one-on-one interviews. Understand your target audience's pain points, needs, and desires. Ask open-ended questions to uncover their motivations, frustrations, and how your solution could address them. Analyse the information gathered to identify unmet needs your target audience is facing. Validate whether your value proposition genuinely addresses these needs and offers a compelling solution.

This is a loaded question; you almost always need more than a value proposition to talk to investors, especially if you are a first-time founder. You want to conduct interviews, validate problems, validate a solution, get some design partners, and maybe even some LOIs before approaching investors.

Often a governmental agency may need a product or service and may pay you to develop the Minimum Value Proposition. As a small business startup in the US, the places to search are the Small Business Innovation Research grants from each agency, and the Commerce Business Daily for Broad Agency Announcements seeking solutions. The military are curious about testing possible solutions because throwing $100,000 at one and proving why it can't work, means it's equally impossible for an enemy to use against us. That's a great way to reduce your own investor risk, and the risks you'll be asking other folks to take with their money.

Team. There's an old adage among VCs that goes something like: it's better to invest in a strong team and weak (not-so-great) idea, rather than betting on an awesome idea and a weak team. Why? Experience matters. Chances of success are multiplied by having founding team members that have been-there-done-that. It minimizes the pitfalls and accelerates the overall performance. As an entrepreneur with a promising business idea, it's important to assemble a founding team that covers the bases. Not only because investors will look closely at the players, but because you want to have the right people involved to realize the success of an A-game. Put bluntly, lots of people have great ideas, but only few know how to execute to achieve them.