Have you confused product-client fit with product-market fit?
At Series A, true product-market fit must be proven. However, this is harder said than done.
Many secure a few big wins & lull themselves into a false sense of security.
Product-market fit & product-client fit are 2 different things.
There are more than 350 major financial institutions in the UK alone. Winning the first major client means you have product-client fit. When one person sees a benefit to your technology, this should not be mistaken for client demand.
Do you know if the client is an anomaly or represents the entire market?
Mistaking the two will lead you to the pipe-dream that you are focused & ready to dominate the market.
3 key questions to ask yourself:
1. Sacrifice is king – are you kidding yourself thinking you have 5 valuable use-cases?
When selling to a multitude of segments, or cross-value chain in a bank, it is easy to make excuses about why you have so many use-cases. If you have to adapt your pitch & proposal every time – ask yourself why? Have you anchored your value at one point which is relevant for every sector you are targeting?
2. Is your product-market fit aligned to something which doesn’t matter?
Product-market fit should guarantee the biggest business impact. In one organisation, the price, proposition and technology needs across a multitude of stakeholders are vastly different.
A RegTech stuck in the operational weeds cannot say it has found true product-market fit. End-to-end compliance would entice the CCO. Who on the value chain do you really help? Has your product-market fit been dictated by someone who doesn’t sign the cheque?
3. Are you kidding yourself thinking you have no competition?
You think you are a first-mover and have no competition, but this doesn’t give you free rein on product-market fit. Google was not the first search engine. Know what you are up against & never overlook new entrants. Have you considered the risk of your prospects looking in-house?
Early VC funding levels have dropped 9% since 2017. Investor scepticism is at an all-time high. More than ever, true product-market fit must be proven. Product-client fit will no longer suffice.
