Business Idea Validation Framework for your Startup Idea


Business Idea Validation Framework For Your Startup Idea

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What did two aspiring entrepreneurs do when they failed to get a taxi on time?


They Invented Uber!


When Garrett Camp and Travis Kalanik met for a conference in Paris, they both had no idea that the night would give them an idea of a lifetime which eventually would help millions of people worldwide.


Garrett had a crisp vision of solving the big taxi problem in San Francisco. Since It was a common problem most San Franciscans experienced. Hence Garrett’s business idea validation was just one step away since he had a big market need in front of him.


Initially, the idea was just establishing accessible black car service which will help the citizens. But they both went on to expand their crystal clear vision worldwide. Now we all know what Uber is worth right now.


Investors look for business idea which are early adopters.


Check our guide on how to pitch business idea to get an investor’s perspective on pitching your idea.


Uber was definitely an early adopter they researched the market and saw there was gap between supply and demand. There were idle cars and on other side people were looking to get paid for their driving and boom Uber app was launched to change the life of millions of people worldwide.


In this post, we’ll take you on short trip to show you the path of validating a new business idea, concept or a product. This is the first step for you to create a Great Business Model which is bound to get the attention of the Investors.


If you, like most desiring entrepreneurs, want to turn that idea into fortune, first validate your idea — prove it has worth; the process thereafter actually gets much easier.


Here is the ultimate guide you need that will take you through the whole process of validating the business idea with real life business examples.


Testing your Idea


Testing the Business idea is as necessary as taking the ship in the ocean


Even if you small business and cannot afford to do costly studies, you do have the ability to run different tests in  your app or on your website and see what works best”- Roger Dooley


With the idea in your head, what’s the next step?


Here’s what founders constantly think about:


“Try to figure out how to make it!”


“Figure out how to start small and make it big”


As Founder face questions like how many people want this product and will they spend enough on my product?


So why not test the idea first.


We usually assume that – if enough people wanted this product – We’d be able to figure out how to make it. You will be exposing your business idea to the marketplace and get some attention.


For example, you could end up paying thousands of dollars to build an expensive product that your customers may not even want, need or use.


Have you researched whether it has market need? Because without market need the idea is worth nothing. Here are some real-life examples which shows how important it is to validate Business idea:


  • Mayonnaise is already having a lot of demand and people enjoy it. But as it contains egg, Vegans were avoiding it, after market research. Dr. Oetker Fun Foods Professional introduces Veg Mayonnaise in 2018. After all, food companies figure out ways to do this every day. So instead of a direct launch, they tested it  and product was definitely in demand.


  • Have you thought that there is certain process which takes time and you can solve just in seconds? Contact less cards are now helping banks to solve such problem in few seconds. No dialing PINjust tap card on POS machine and you are done. Investors are keen to spend money on product which are early adopters.


  • There are certain problems which are big and hard to solve which proves to be costly. So is your idea solving such problem? if yes you can charge loads of money.


  • Companies were facing problem in storing data which was needed on daily basis and boom Salesforce found solution of CRM and though they charge loads of money for it. Now Salesforce is most used CRM across the Globe.


  • In 2011 HP Launched HP Touchpad to compete with iPad. HP Touchpad failed to do better than iPad and did not have better specifications compared to iPad which made it just a simple touchpad like every other in the market.


  • In 2009 NOOK was launched. It was an e-reader. As Amazon’s Kindle was already dominating the market. It was inexpensive and Kindle was easy to sync up with Amazon digital account. Hence NOOK never got the spotlight.


Many founders fall into the trap of solving problem and forget to get idea validated. As we know market loves ambition but not delusion. Make sure you make optimum use of resources to produce products with real-world value.


We have reframed this chart with extensive study on 150 startup founders how they achieved their 10x growth in first 5 years of launching the product.


In this chart is process we used use with our clients. But, remember that you will need to be dynamic because every business has different processes.


Market Validation Framework– Key Step to Gauge the Power of your Idea


The purpose of the market validation stage is to find the answers to the following important questions:


  • Is there a market for the product as a result of your business idea?


  • If there is the market, is it big enough?


  • Are there people in the market who are starving for the solution to the problem your product will solve?


  • Are they willing to pay for such a solution?


  • If you successfully proved that you have enough big market, with potential customers that are starving for your solution and are willing to pay for it, your business idea has passed the market validation process. Now second step is focus on Business idea validation process.


Business Idea Validation


With successful market validation you can start idea validation stage only if your previous market validation process proves that you have a market for your business idea.


Still, your solution is only in your head as a possible business idea. So currently you don’t have any product/service to offer to the market. Also you haven’t built any solution to offer.


Validate idea by interviews, brainstorming sessions. Discuss idea with end customer to get their point of view and match whether your solution is feasible for the problem they are facing.


At this business idea validation stage, you want to be sure that it is worth to start spending time, money and efforts. So to go one step further to design and build your primary product we need product validation for final take off for business idea.


Building an MVP


If your idea travelled till this stage, you are sure that there is a big market for your product/service. People are keen for the solution and willing to pay you. Till idea validation stage you are sure that there was enough interest for your potential product. Also, you want to ensure that people will buy from you.


Now what you need to do is to acquire early adopters for your MVP (Minimum viable product). Because founders need product to be launched with early features to satisfy customers and provide feedback for future product development. Also investments are funded to those companies whose goal is grow fast.


MVP is the smallest and first step you can make to start the validation of the product, it is also important to work on your MVP which will Include all desirable functionalities and specifications you have approved from the previous two Business idea validation stages. In such a way you can be able to prove or disprove your business idea to the investors.


You need to check all the information that you have collected from the two stages so that you can decide what features to include in your first MVP and what need to contain your total offer as whole for your business idea to investors.


As a founder, you can follow your vision. But as a businessman, you need to be creating products that people want to buy.


The Business idea product concept should be as visible as you can see fish in the aquarium. You must clarify what do you want to see as final product.


  • Problem Definition: Founders face scary thoughts like world don’t require their product. Avoid such thoughts and be more feasible on forecasting the relevant problems that you can solve more efficiently and confidently.


  • Customer definition: As you are starting to enter market at first it’s impossible to capture entire market. But gradually you surely would be there. So find out what geography to target. What clients do? What is the turnover of Client Company? Which industry? and so on.


  • Define your unique way: Are you going to solve old problem in new way? Or vice versa. Focus should be only on providing value.


  • Formulate Hypothesis: Consider your business idea as a set of Business hypothesis. A clear definition of answer will ultimately land you on a decision whether the business idea is viable or not.


  • Development of value proposition: List down what benefits can a user get from using your product compared to existing solutions in the market. Be sure to simple and not time consuming.


Don’t make your idea chase an investor rather make investor choose your idea:


So how can I predict if an investor like my idea?


See if you have holes and figure out what you need to do to prove your hypothesis, to make it happen.


Investors are interested in startups which can make returns quickly they are always channeling new startup because they know investing in startup who has a unique and clear goal will make them loads of money.


The 3 Key Pointers


These 3 pointers helps founder to focus on investor point of view.


Because investors know Startup = Growth.


Market: The idea which you are going to launch have you forecasted market growth? You must aim for a minimum 20% Market growth.


Support in fund raising: A good idea that has been validated and has shown potential can bring investor via incubator route. Most incubators run pilot survey where the entrepreneur has to present his idea before investors to secure funding. With survey they forecast about investing and turn that start up into next big thing.


Shared resources: Sometimes incubator shares their resource which helps startup in faster realization of their business idea and land in market.


Business idea in mind is as safe as ship at seashore. Take that Business idea and validate it into market and start sailing. Go change the world!




It is important to remember that idea validation doesn’t eliminate all the problems and it is just to journey. Still, it does prepare you for upcoming stages of how to get investment and how to make idea turn into real life product.


It is an effective way to minimize risks and save loads of money. Consider all the steps to make your business idea shine from stack of ideas available in the market.


We know you have amazing business idea. The key is to know how to vet  business ideas. With our 5k+ investors network and access to 2000+ funds worldwide let’s get your business idea the required funding.


Alcor Fund encourages founders & entrepreneurs to bring their startups in front of the world. By backing 500 startups through our short funding cycle. We aim to create value for every smart startup at every level of the growth stage

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