Finding product/market fit is like giving your company the necessary fuel to come out of its garage on the road to success. Many investors want to see it before really doubling down on investment. So what issues do founders sometimes find when trying to reach it? And how can they adjust their strategy to achieve product market fit?
Carlos Espinal, Partner at pre-seed and seed acceleration fund, Seedcamp, will talk about this on How to Web Conference 2014 Future trends & entrepreneurship track. He has both the keen eye of a VC and the mix of tech experience that make him an authority in the European startup ecosystem.
Passionate about cutting edge technologies and having a deep understanding of the VCs’ mindset, Carlos leads the startups’ acceleration experience from initial investment to Seedcamp Academy and beyond. Consequently, Carlos’ standards for accepting a startup into the Seedcamp program are very high, but he can also share precious advice on how you can work to become eligible.
How to Web: What is product/market fit?
Carlos Espinal: Generally speaking, it’s when you’ve optimized your positioning, product, and go to market strategies to adequately fit your customer segment, and therefore growth will happen more efficiently.
How does one know he has reached product market fit?
In the words of Marc Andreessen – when “Customers are buying the product as fast as you can make it, or usage is growing as fast as you can add more servers.”
Are there common challenges that startups encounter on their way to reaching it?
Tons! Identifying your customer base for one, then how to balance product development with communications and relevant marketing to reach your customers while fundraising and using cash optimally. It is quite hard!
How one should go about finding the product market fit?
I’ll discuss this at my chat during How to Web, but there is no ‘one way’ or ‘the right way’. In the end, it is a series of experiments. I talk about a way to get started here.
Are there some essential aspects that founders systematically omit?
It is hard to generalise, as every startup is unique… but one detail that is very important and you need to constantly do it: not lose touch with your customer base and what their needs are.
This doesn’t mean you define your product by what they say, otherwise products like those created by Apple or Ford (we all know the famous Ford story about horse-drawn carriages vs cars) would have never been made, but rather speaking with your customer regularly helps you focus on the key attributes that matter for your product to stand out in their eyes.
Generally, when joining Seedcamp, where are the startups in this cycle and has this changed in the last years?
At Seedcamp, we have always invested in pre-product-market-fit companies. Whether they are at the prototype stage or the shipping stage with revenues, that is where our support network and Academy program is designed to help the most.
At Seedcamp, do you select startups which already have traction? Is traction necessary for the teams to benefit from your help in reaching product market fit?
Traction is a nice thing to have, but our program doesn’t solely choose companies on having traction/no-traction alone. We choose companies far more on the quality of the team behind the idea.
What skills are you trying to teach entrepreneurs so they can reach this milestone necessary for growth?
Through Seedcamp Academy (the mentoring program that is part of our Seed fund), our mentors, ranging from product managers, subject-matter experts, and successful entrepreneurs, guide Seedcamp founders through the process.
Is Seedcamp a point of entry to the US market/ecosystem or is it a consequence of the startups’ market targeting? Could you elaborate on the matter?
It is worth noting that there are many European investors that invest in Seedcamp companies as well. In fact, a large portion of the follow-on capital for our companies comes from European funds, as they understand many of the local partners and can help startups in their early relationships.
However, it is no surprise to anyone that the US continues to be the largest source of venture capital funds globally. Thus, it is only a matter of time until a globally-minded, fast-growing company brings on capital from a US-based investor.
At Seedcamp, amongst the various goals of our Academy’s US Trip is to help companies meet US-based investors to expedite their fundraising process.
What are some resources that startup founders can use to help guide them towards product/market fit?
Feel free to check out our library of resources on the matter here – http://seedcamp.com/resources/