But other than asking your friends, family, and contact network for feedback, how do you validate your startup idea with actual market data?
In these lean startup times, you want to find a quick, easy, and inexpensive way to do market research about consumer behavior, market segmentation, and market sizing.
That is to say, before you start a new business you need to know if there are consumers out there who may be interested in your service or product, what their demographic profile is, and—very importantly—how many of them you could potentially reach.
This kind of market sizing questions are vital for up and coming companies.
Quick and easy feedback with market validation surveys
Jamee Herbert knew that when she founded BridgeCare Finance, a startup that’s trying to find innovative ways to help parents pay for childcare so they can pursue both a successful career and a growing family.
So Jamee didn’t stop when her friends and business contacts in Seattle told her she had a great idea. She decided to listen to her target market to find the Market Powered Data that would confirm her hunch and, very importantly, convince investors that she was on to something.
“We had to have more than just a gut instinct. We needed data to look at where we could fit into parents’ lives.”
Jamee created a 28-question consumer behavior survey where she asked parents about their childcare needs, their careers, and their daily life.
She launched the survey to a nationally representative sample of parents with children younger than 5 using SurveyMonkey Audience, a fast, easy-to-use, cost-effective consumer panel. Then, she started watching the results come in over the next 24 hours.
Jamee looked at the responses in real time, wondering, “Is this the opportunity that I think there is? Is the data going to match that? It was my future that I was seeing coming in, essentially.”
The survey data clearly confirmed her hypothesis.
With such encouraging feedback from actual parents out in the world, Jamee was now certain that quitting her corporate career was the right thing to do.
Using consumer data to evidence the market opportunity, BridgeCare Finance won a pitch competition that included a $20,000 prize, which gave Jamee the momentum she needed to talk to investors. Funds started coming in.
“The fact that they had solid and compelling market data was a major influencer in getting me to invest,” says Bill Lemon, President of the E8 Angels group of Seattle and one of the first venture investors to support BridgeCare Finance.
Soon, the startup earned a spot in one of the most coveted business accelerators in the country, Techstars Impact Accelerator in Austin, Texas, which also invests in the new companies it selects for its program.
“When I’m backing an entrepreneur, one of the things that I’m looking for is unique market knowledge that no one else has access to,” explains Zoe Schlag, managing director at Techstars Impact.
Jamee moved south, expanded operations to Texas, and started growing the team. After the first two weeks at the accelerator, including conversations with dozens of mentors, she realized she had to take her company nationwide. So she restarted the cycle: She drafted some new startup survey questions and resorted to the SurveyMonkey Audience consumer panel again to get them answered.
“We’re using Audience to figure out which states to go to next and when,” Jamee says.
On this journey from startup idea to venture-backed company, the Market Powered Data she obtained from consumer behavior surveys became a crucial resource for sharing the story she had envisioned early on with investors and customers.
Before she got that outside validation, she had a startup idea—but not a startup.
“We would not be here without what we found from that first survey.”