Home Startup Validate Your Startup Idea – Part 1

Validate Your Startup Idea – Part 1

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I analyzed the pitch deck and business plan of 100+ startup teams in the past years. And, I worked with 10+ teams closely to help them become successful. I found there are several questions that are common among them. The most important one is How to validate my idea is worth a dime.

You can find several of them below.

  • What problem is worth to solve?
  • How can I increase the chance of success?
  • When should I accept my failure? 

I want to answer those questions in a series of articles. The analysis frameworks explained in these articles can be used by entrepreneurs and investors. If you are an entrepreneur, you can evaluate your ideas before spending much time and efforts. If you are an investor, you can distinguish between companies with high potentials and those with high risk to invest. 

Let’s start …

A technology startup company has 3 main stages of establishment: (a) idea validation, (b) build a product, and (c) company growth. Most of the unknowns exist in the “idea validation” stage that leads entrepreneurs and investors not be able to decide confidently.

In this article, I explained some high-level factors that must consider as prerequisites for a startup idea.

Is it aligned with a Mega-Trend?

“Mega-trend” is a term to describe a set of changes that are enormous in their impact and unstoppable in their occurrence. They represent sustained global changes that undoubtedly and significantly impact the economy, society, and cultures.

Ensure your startup idea is aligned with at least one mega-trend! Click To Tweet

What are the current mega-trends?

According to PwC, we currently have 5 major global mega-trends as follows:

  • Shifting in global economic power,
  • Demographics shift,
  • Accelerating urbanization,
  • The rise in technology,
  • Climate change and resource scarcity.

Related Link- Five MegaTrends And Their Implications For Global Defence and Security

An idea that is not aligned with these mega-rends may not have a high chance of success. For example, improving the efficiency of the waste management system is aligned with “urbanization and resource scarcity”. Beyond Meat Inc. is another example of recent works that are aligned with the mega-trends of “climate change”. 

Related Link- Beyond Meat Shows the World is Changing

Where is located on the Hype Cycle?

“Hype Cycle” is a branded graphic representation of the maturity, adoption and business application of specific technologies introduced by Gartner. 

According to Gartner, technology has 5 stages of maturity as follows:

  1. Innovation trigger
  2. Peak of inflated expectations
  3. Trough of disillusionment
  4. Slope of enlightenment
  5. Plateau of productivity

Related Link- Gartner Hype Cycle

Use the Hype Cycle analysis to determine the risk profile of a technology Click To Tweet

A technology that is moving toward:

  • “Peak of Inflated Expectations” will be suitable for a risk-taking investor
  • “Trough of Disillusionment” will have a hard time to convince a third-party investor
  • “Plateau of Productivity” will be suitable for a conservative investor

Think Globally. Act Locally!

To become a successful company, you have to think globally and act locally. Most entrepreneurs think globally but they FORGET to act locally. 

Take advantage of the opportunities existing in your local communities Click To Tweet

Every city has its own problems and opportunities. As an entrepreneur, you have to take advantage of the opportunities in your surrounding.

For example, if the financial industry is huge in a city, you have a better chance of success if you aim a problem in that industry. You ask why? You most probably can raise capital or find customers in the local ecosystem through in-person meetings.

Takeaway! 

I can summarize this article in 3 suggestion as follows:

  1. Ensure your startup is aligned with at least one mega-trend, especially, in your geographical region 
  2. Use the Hype Cycle analysis to determine the risk profile needed for a technology
  3. Take advantage of the opportunities existing in your local communities such as a leading industry or a dominant culture