How to Show Validation When You Have None
One of the most challenging skills to develop as a first-time entrepreneur is storytelling. Most startups I’m lucky enough to advise face this problem. They’re solving a meaningful problem and have great tech but struggle to tell their story.
One of the most significant parts they struggle with is how to show momentum and validation when they don’t clearly have them. For example, how do you show validation for your solution when you haven’t even launched it? How do you show validation for a marketplace business model when you haven’t even started selling?
That’s when you get creative and apply the art of storytelling. I would like to share two examples from our very early raise (seed and A round).
Example 1: Paper prototype and pre-registration for our seed
When we were raising our seed round in 2016, we hadn't even launched our platform. Our team was working to create the right training sets and build the complex machine learning models we use to decode biomedical data.
While we had some initial findings that our technology worked, we were far from putting our MVP in users’ hands; in fact, six months away. But, we had to raise money, so we got creative.
Our goal was to show that our solution would solve the problem we were aiming to solve. So what did we do? We hired a freelance designer, paid him $1,000, and worked with him for 20 hours to create the initial wireframe of what our platform would look like. We then printed it, rented a car, and drove across Ontario to 200 research labs for a whole week.
We met hundreds of scientists, showed them the printed mockup, and asked them if it would solve their problem. They all said yes, and we pre-registered them to use our platform when we officially launched.
We then created a slide in our deck that said, “200 labs already signed up to use BenchSci.” This slide was crucial in our fundraising process.
Example 2: Extrapolating user purchase intent for our series A
When we raised our A round 15 months later, we had to get creative once again.
While by that time we had found product-market fit, we had yet to prove our business model.
The idea back then was to build a marketplace around our SaaS offering. The problem was that we hadn’t launched the marketplace yet and needed to raise our next round of funding. So what did we do? Again, we got creative.
Our platform helped scientists decide which antibodies they should use for their experiments. The plan was to also help source them. But since we didn’t have a buy button, we leveraged the best next thing: the “click to vendor” button we had on each product page.
Based on the number of times scientists clicked the button, we calculated their “intention to purchase” rate. This allowed us to estimate how much gross merchandise value (GMV) we would have if we did have a “buy” button. Once again, this slide was crucial for successful fundraising.
These are just two examples of why telling a compelling story is the most crucial skill a CEO should have, in my opinion. What truly makes the difference isn’t what you have accomplished as a company, but how you describe your accomplishments to tell a complete and exciting narrative.
