This week Rev 1 Ventures came in to host an idea validation workshop. They are the most active seed-stage venture fund in Ohio with a wealth of resources for people with upcoming businesses and fresh ideas who are looking for validation and action plans. Matt and Tim came in to talk to us about advice for early stage startups and market resourcing for companies looking for investment. Venture capital is just a form of funding for a developing business in which a firm invests capital in that business (which will eventually be paid back) in order to help that business progress and develop success. Rev 1 is a Startup Investor Studio who not only offers venture capital to fresh and upcoming businesses, but also offers valuable services to their investments that help augment those funds and progress their investment’s businesses. Rev 1 is able to distinguish from traditional venture capital firms through value added services, partnership with large corporations in the area, and work space availability for developing businesses to work and progress.
This week for the Business Builders, several members pitched their ideas in an attempt to verify their business model to Rev 1. The foundation of an idea is a problem, a solution, and an explanation of what your idea is. One of the key concepts that Rev 1 promoted for any elevator pitch was having a problem, a solution, and an ask from your audience. Another huge point that Rev 1 emphasized for problem and solution statements was the avoidance of complex jargon. If people can’t understand your problem and solution in layman's terms, then you're never going to get the investment and funding you desire. Problem-Solution statements are meant to be straightforward and easy to understand. The third point Rev 1 stated about elevator pitches was failure to state the problem in your pitch. Many people like to get straight into their solution without ever explaining what their problem is in the first place. Having a well thought out and relatable problem that is followed by a simplistic and understandable solution will bring you enormous amounts of success compared to a problem that is barely mentioned with an elaborate solution.
When Rev 1 looked into the leading research on why startups fail, the #1 result was that there was no market need. This data seems insane, however, the core problem that it supports is that so many people start with a solution without ever having a problem to solve. You have to think about your idea as a hypothesis. You have to be prepared for your idea to fail so that you are able to pivot in the right direction and adapt as needed. No idea is perfect and any successful business has gone through several changes before getting to its current status. Failure is the best form of education and if your idea is not set up for failure and change, then it is not going to survive. It is all about figuring out ways to test your idea for validity in order to make sure it is suitable for the market.
Another idea that Rev 1 preached was the concept of user, buyer, channel partner, and supplier. This is everyone who is going to be involved in your business. Users are the people who are going to be using your service, buyers are the people who are going to be buying your service for their users to use, channel partners are the people who are going to get your product into the hands of your users and buyers, and finally, suppliers are the people who are going to supply the product and bring your company to life. All of these business aspects are important for validation. Business is all about people and people provide feedback that gives you and your business validation. If you don’t have the feedback from the people that make up your business, then your business cannot survive. It is better to fail fast and fail often, because eventually you are going to get a win.
For the rest of the meeting Rev 1 proceeded to volunteer audience members to give a 60 second pitch to promote an idea or business plan they’ve been working on. After the pitch they critiqued the idea and asked for audience feedback on what could make the business model more concise, and what action plans they could pursue to propel their business forward. Of all of the ideas pitched during the meeting, several lessons came out of them. One lesson was that it is better to get direct customer feedback in order to map out exactly what value your customers are receiving from your current product. One method of receiving this customer feedback is surveys. Many people have a lack of understanding when it comes to surveys. The goal of a survey is to get to the core of the problem you are addressing and to prove that the customer has the same assumptions that you have about your problem in order to verify that your business model will bring success.
Another common issue that was addressed with one of the pitches was that ideas often have subproblems. When you approach a problem with too much generalization, you come across a problem that has several subproblems that have their own individual avenues of being addressed. This results in crossroads. It is up to you to choose which problem to address and to address it with full capability.
Of all of the issues you come across with business models and idea pitches, validation is by far the most important. When you have an idea that needs validated, you must first identify your stakeholders. Who is going to be affected by your product/solution? Once you have identified your stakeholders, you must then acquire user feedback. Everyone is going to have a theory about the problems and subproblems they are trying to address. It is up to you to decide which problem you are trying to address and to figure out the best method to approach and solve that problem. Once you have the problem defined, you can begin to pursue your solution and receive validation.
Ultimately, you validate your idea through tests and hypotheses. Talk to experts, receive customer feedback, and perfect your business model. After that, all you have to do is get to work. Show the world what your idea is all about and just know that The Business Builders have your back every step of the way.
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