“Product/market fit” is a well-known and often used phrase among venture capitalists. It is also the place to start when assessing the viability of a startup. Question #1: can we create value?
It is not surprising the VCs often focus on this first point, as there is little reason to proceed unless we have product/market fit. I have also heard VCs use the phrase “founder/market fit” in reference to the team having what it takes to succeed with a particular set of customers. However, the phrase “founder/industry fit” is a new one, which I believe gives us a more holistic view of the enterprise and how it fits into the value network.
We can agree that market fit comes first, but even if we are able to identify customers who are in need of our offerings, we also need to have the right management and be in an industry in which the startup can thrive. We’ll break down our investigation of the founder/industry fit into three sub-chapters: team, competition and secret sauce, answering three fundamental questions:
- Do we have the right people in place? — TEAM
- How will we stop copycats? — SECRET SAUCE
- How quickly and perhaps profitably can we grow? — BUSINESS MODEL