Market Validation

Definition

Proof that real customers exist, will pay for your solution, and actually want it—separating your assumptions from reality, though many founders skip this step entirely.

Example Usage

We validated the market through 50 customer discovery calls before building a single line of code.

Origin

Business methodology term popularized by Eric Ries and Steve Blank in the 2000s.

Fun Fact

Most startup failures involve building something nobody wants—market validation could prevent ~70% of them.

Source: Lean startup and validation terminology

Related Terms

Intermediate

Acquisition (Acqui-hire)

When a company buys another startup not for its product, but primarily for its team. The startup equivalent of a zombie becoming useful.

🚀 Startup / VC

Advanced

waterfall analysis

A spreadsheet model showing how acquisition proceeds flow to different shareholders based on liquidation preferences and other terms—usually revealing that founders get far less than their ownership percentage suggests. It's where equity dreams go to die.

🚀 Startup / VC

Intermediate

chasm

In startup land, the terrifying gap between early adopters who'll buy anything shiny and the mainstream market that actually expects your product to work. Coined by Geoffrey Moore, this metaphorical canyon is where many promising startups go to die, usually because they assumed soccer moms would be as forgiving as tech bros. It's the entrepreneurial equivalent of realizing your mom's friends won't think your jokes are as funny as your college roommates did.

🚀 Startup / VC

Intermediate

Accrued Interest

Interest on convertible notes that automatically converts to equity at future rounds, making the note holders richer for waiting.

🚀 Startup / VC

Beginner

equity financing

Raising capital by selling ownership stakes in the company rather than borrowing money. It's the fundamental bargain of venture capital: you get money now, investors get a piece of your future success (or failure).

🚀 Startup / VC

Intermediate

follow-on funding

Additional investment in portfolio companies by existing investors in subsequent rounds. Doubling down on your bets or, less charitably, throwing good money after bad while hoping the first investment wasn't a complete disaster.

🚀 Startup / VC

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