How To Validate Your Startup Idea (Before Building An MVP)

Hello to Canada’s SaaS Community,

Great ideas are wonderful—but they only become businesses if someone wants what you’re building and is willing to pay. That’s why validation is so crucial; many amazing ideas in theory don’t work out to strong business concepts. Speaking with SAAS NORTH, Dallas Price—an idea validation expert through his role managing idea validation at Forum Venture Studio—shared the framework he uses that any idea-stage founder can leverage.

Key takeaways:

• Your first goal should be to come up with as many ideas as you can—then try to kill about 85% of them.
• Conduct problem-validation interviews in order to identify your “wedge” —a few features people are willing to pay for.
• Aim to get 3-5 committed customers (e.g. LOI or future-date contracts) before building your MVP.

Startups have enough risk that you can’t avoid—you certainly don’t want to take on any more than you have to. And validating your idea is a great way to de-risk just a little bit, saving the time, money, and headache of building the wrong thing.

Venture studios are particularly good at this, running through dozens of ideas before validating the small handful that they will build. Dallas Price knows this world well in his capacity leading idea validation at Forum Venture Studio.

Speaking with SAAS NORTH, Dallas shared Forum’s model for validating ideas—a framework that any idea-stage founder can use.

Step 1: Come up with (and kill) ideas

At Forum Venture Studio, Dallas manages a Slack channel where all Forum team members contribute:

1. Explicit business concepts;
2. Tricky problems they’ve faced or noticed in the market, or;
3. Interesting spaces worth looking into.

While you may not have a team of people to provide ideas, you can still think along those three lines.

If you already have a specific focus, you can still ideate more broadly to think about how you want to approach the industry. For instance, knowing you want to focus in financial services is fine—just make sure you brainstorm ideas across back-office, front-office, sales, trading, retail retail banking, investment banking, and more. This can come from your own observations, attending events, or by conducting informational interviews with industry leaders (more on that in step two).

As ideas come in, your first goal should be to find a reason to kill them.

Dallas said he typically will kill an idea on a few different criteria:

• Individual passion: If you hate the idea (or even just aren’t that excited by it), you won’t be able to lead it for years.
• Too small a market: Forum typically wants a minimum $1 billion market where the company has a legitimate opportunity to reach at least a $100 million valuation.
• Too much competition: While a couple of Seed or Series A funded startups shows money is flowing into the space, Dallas might kill an idea if there are multiple Series B, C, or D funded startups.
• Too little competition: If there is zero VC activity in the space, that’s a red flag that perhaps companies aren’t willing to spend money to solve the problem.

Step one should kill about 85% of your ideas; that’s fine, since building a startup is less about finding a good idea and more about finding something you can execute on.

“Throughout [initial research], we’re just trying to kill stuff as quickly as possible,” said Dallas.

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Step 2: Validate the remaining ideas with problem-focused interviews

The next step is problem-focused interviews that help identify your “wedge” (the first features someone is willing to pay for) and find 3-5 potential buyers before you start building.

Finding interviewees is often your first exercise in cold outreach. First, Dallas researches what types of people (i.e. job titles and organizations) might be interested in an idea, leveraging tools like Linkedin Sales Navigator, Apollo, Clay, and Claude. Second, he connects with them cold via LinkedIn. Third, he asks for an informational interview.

Here’s the actual script he uses for LinkedIn DMs:

“Hi [first name],

Good to connect with you. I would really appreciate your expert advice (and should mention that I’m not trying to sell anything).

I work for a venture fund and we’re building a [one-line product description] for [customer type] to solve [problem statement].

I would love your feedback. As mentioned, we’re super early, so nothing to sell you right now. Could we connect for a few minutes next week?

Best regards,

[Your Name]”

“People are surprisingly willing to give you time if it’s a real problem for them,” said Dallas.

Step 3: Conduct problem-focused interviews to find your wedge

In interviews, it’s important to structure questions to avoid people pleasing responses that send mixed signals.

Here are some lines of questioning Dallas uses:

• He will present his understanding of the problem, then ask the interviewee to clarify if that’s how it actually works in the real world.
• He asks what the problem means to the person (e.g. what impact it has).
• He asks what existing solutions the person may have tried—and if those problems left any unresolved issues.
• If someone stopped using a premium solution and went back to manual methods, he asks what made the paid solution inadequate (e.g. cost, implementation, benefits).

As people describe problems they face or solutions they’ve tried, you can start documenting what might become your “wedge” features—then parrot those back to interviewees and ask how the feature might click into their existing workflows.

Step 4: Pre-sell before you build

After you’ve identified your wedge, you can reach back out to those original individuals or begin reaching out to new individuals with a more commercial approach.

You want to end up with 3-5 committed buyers before you start building. That may not mean money changes hands, though—a letter of intent or contract with payment upon delivery should be enough to justify building your MVP.

Dallas cautioned that this step can get a bit messy, since the product you build will inevitably be slightly different from the initial wedge you discover. These pivots are normal and can even unlock new growth potential, so the key is to continue following your customers rather than getting stuck on the one idea that worked in the past.

An alternative path to founding a company

After Dallas completes these validation steps with Forum, he’ll recruit a founder to join the company. From there, Forum invests $250,000 USD into the company to build the wedge product for the identified ICP. In return, Forum takes approximately 25-35% ownership. The structure enables 10-15% for an employee stock option plan, leaving the founder with 51-60% of the company.

For idea-stage founders, joining a venture studio can be a de-risked alternative to starting on your own; it offers a bit more job security, ideas that have already been pre-validated, and the freedom to pivot (if the market requires it).

Regardless of which approach you take to founding a company, though, it’s crucial to validate ideas before building. It’s not only a more resource-efficient way to build a business, it’s also a massive time-saver; not building the wrong thing is nearly as valuable as building the right thing.

“Ultimately, we can only work on so many things and we want to be working on the best thing,” said Dallas.