By Fernando Berrocal
Startups in general are interesting, adventurous, and forward-thinking foundations for our modern technological world. That’s when you understand that evaluating your Startup Idea is something crucial to the future success of your startup. Over the past two decades, these types of businesses have delivered excellent value to both themselves and their final consumers.
Startups do not have a clear business definition as of now; however, they are often described by the majority of people that know about them as the following: “Startups address issues with their ideas that the founders are enthusiastic about.”
Investors' Point of View
“Startups are businesses that expand quickly because if they don't, they're just like any other regular business.” Your Startup concept is a hypothesis, and it’s your responsibility to turn it into a reality and a pitch in front of your potential investors. Every startup is made up of three pieces, and having a clear vision of these three parts is what makes a startup valuable and grows at a faster rate than a regular type of business. Let's go over each of the three parts that describe a Startup one by one.
Any business should start by developing a solution to an issue that many people are experiencing, rather than the other way around (that tries to create a problem out of a solution). The three characteristics should be present in each startup idea:
- Growing: Your problem should be growing, implying that it has a high growth rate and that more and more individuals will be confronted with it in the future.
- Crucial: Your problem should have a sense of urgency to it, since if it doesn't, it indicates people can either live with it for a little longer or, in certain cases, they can figure out the answer on their own.
- Common: Your problem should be a common problem; it means that a significant number of people are experiencing it. It's also not uncommon for entrepreneurs to be confronted with issues themselves, which is fantastic. Because you'll be even more eager to solve the problem and then utilize that desire to share the solution with the rest of the world.
- Expensive: Yes, if you are tackling a problem that is costly to solve, you can charge a significant sum of money from customers.
- Frequency: These are the issues that people will face regularly at some point in their lives.
What are the Ideal Problems?
- Millions of people should be affected by the ideal problem, or millions of people should be affected by the problem.
- Every year, the problem, or the market for the problem, grows by at least 20%.
- People are currently confronted with the issue.
- They may be able to break into the billion-dollar market.
Entrepreneurs should not consider creating a product by making a problem out of a solution or from a certain set of interests. And not being able to start a business is a major problem because it's like producing something simply to have a product to sell, which demotivates people in the end since it becomes less exciting.
Remember this and you won't make the same mistakes. It's never a good idea to look for a "solution in search of a problem." If there is growth, it will be highly inefficient. So, keep in mind that you should be concerned about the problem, not about "any other means that you are interested in."
This is a difficult task since its investors will ask you questions like this: "Why are you going to win over everyone else?" or "Why are you going to grow the fastest?" This is what encourages investors to place their faith in you over the competition. This simply explains the "unfair advantages we have that others don't" and how they relate to progress. This is the reason why people will select you above others, and it is the reason why your customers and stakeholders will believe in you.
What are some unfavorable advantages to look for in your startup?
A startup usually has a couple of advantages listed here and it is nice to have at least one or more of them, and if you have all of them, you're well ahead of the competition. Let's have a look at some of the benefits:
- Founders: The founders are among the top ten people that are capable of making that thing a reality. If that's the case, there's a good chance that anyone can replicate your concept for a longer time.
- Market: It's ideal if the problem space's market grows at least 20% each year since this will help your startup outperform the industry average growth.
- Goods: Your goods should be 10 times better than the competition's since it will cost your competitors a lot of money to compete with your product.
- Acquisition: In this part, you should be able to answer the following questions: "How to expand effectively without true advertising" and "How to attract consumers with such paid acquisition".
Now, with all of this information, try to answer all of the questions mentioned before about the different problems, solutions, and insights that may appear in your journey of validating your startup idea. After that comes the answer to these questions: What do you need to make your startup work? And how to do it? Finally, after coming up with the answers, you will be ready for the entrepreneurial journey.
Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.