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Mark Cuban and the ‘Shark Tank Sharks’ Will Help You See the Number 1 Reason Startups Don’t Get Investment

Can you guess the number one reason startups don’t get investment? According to what we hear from investors and in our own startup bootcamps, it’s due to lack of market validation.

Initially, that may seem surprising because startups should be the closest to their customers, right? The answer should be yes, but in reality, it’s no. Why? We find that many (maybe even most?) entrepreneurs fall into the trap of assuming customer demand because they’re so convinced of their idea. After all “it’s such an amazing idea that of course the customer will buy,” right? Wrong.


So what do good investors want to see, and how do you deliver it?

 

Customer reactions/desirability for YOUR offer – not a white-paper, not secondary

data, not a look-a-like… but reactions to YOU and YOUR value-proposition.

There are no substitutes for a customer’s reaction to your unique product or service. Almost anything can be used as supporting data, so, don’t get stuck thinking that you have to have everything built or need tons of sales. Early data can be as basic as: hits on a website or Google ad, positive reactions during interviews, customer interactions with a partial prototype, your relevant-experience with the target market, pre-orders, subscriptions to your newsletter, etc. Obviously, the more the better.

 

If you’re still doubtful (and like entertainment), go watch an episode of the TV show

“Shark Tank.” Note the difference in feedback and body language of the

sharks/investors (ex. leaning forward vs holding back) in response to contestants who

rave about their idea but don’t have orders, versus those who have an idea and already

have initial market demand (even if only pre-orders). I’ll let you convince yourself … firsthand.

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