Investor Readiness 1 – Validate your assumptions

Contributed by Kate Strevens

It might sounds obvious – but first you need to have a business that people want to invest in. When you set up your business you will have made certain assumptions about: the problem your product or service was solving, the customers you were targeting, the recourses you needed, your distribution channels, revenue stream, cost structure and some other things.

Investors will want to understand how you’ve fared between that point and now and, primarily, that means have those assumptions been tested? In short, this is what should have been happening over the life of your business:

  • Hypothesis – Here’s What We Thought
  • Experiments – Here’s What We Did
  • Data – Here’s What We Learned
  • Insights and Action – Here’s What We Are Going to Do Next

For example, it’s only when you start testing a business model or aspects of it with customers that you will find if your hypothesis were right or wrong. Hence, your customer development process should build in an iteration loop to fix the shortcomings of your business model.

Here’s what that might look like:

Customer development

Investors want to see the validation of all your assumptions baked into your business canvass. Continuously test those assumptions and iterate (make mirco-changes) or pivot (go back to the drawing board) until you nail it.

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