Using the “Investor Test” to Prove New Product Ideas

Inventors face many challenges, and perhaps the most serious is the issue of marketability. After all their invested time and effort, will they be able to raise funding for manufacturing? Will they be able to get retail distribution? Will anyone actually buy it?

This issue is known as concept validation, and there are two key components for product development:

  1. Technical Validation: Proving the invention is technically possible (that it will work properly)
  2. Market Validation: Proving that people will buy the product (in sufficient quantity, at the required price)

A characteristic of inventors is that they tend to like inventing, leading them to focus on technical validation. At some points, perhaps after perfecting their prototype, or receiving their first sample batch, they must address the second and larger challenge: proving people will buy it.

An easy way to know if you’re validating your product idea sufficiently is with the “Investor Test”. Ask yourself:

If I showed the results to an investor, would it give them the confidence to invest in my product?

This is a very relevant question because many inventors eventually find themselves asking that exact question.  A good invention validation method will be:

  • Quantifiable: instead of vague observations, results should be measurable (numeric).
  • Reproducible: you could run the test again, and get similar results.
  • Trustworthy: conducted by competent people, in an unbiased manner.

While asking family and friends what they think of your new invention is a good idea, it clearly fails the “Inventor Test” of concept validation:

  • It’s not quantifiable because the results are typically qualitative responses like “that’s a good idea, can I get it in blue?” Even if you attempt to measure their responses, the results won’t be statistically significant unless you survey many hundreds of friends.
  • It’s not reproducible because you can only observe the initial reaction of your friends and family once.
  • It’s not trustworthy, because your friends and family have inherent biases not present in typical consumers.

It’s naturally a good idea to validate your invention idea in multiple ways. This will give investors more confidence to fund your product, and give you more assurance that you’re on the right track.