The 24-month journey to product/market fit

How long does it usually take to go through all four phases and what type of investment fits every stage?

After introducing our Startup Progress Barometer, we got quite a few responses about the time it takes to go through the different phases. Someone even called it crazy talk that it takes 3 to 6 months to define the problem and solution. So let’s dive a bit further into the journey to product/market fit, the time it takes to get there and what type of investment is most suitable for the phase you are in.

Prove there is a problem

Most startup founders start with an idea. An idea for a product or a solution. But to start, it is important to figure out which problem you are actually solving for which customer. You have to take a step back and look what your product is actually doing, what does it solve? And for who are you solving it?

Prove your solution

Now comes the fun part. Proving your solution solves the problem for the ideal early customer. We’ve written before about why we stopped building MVPs. The term is too ambiguous and means something different for everybody. We like to talk about solution experiments, prototypes and first versions instead.

Prove people will pay

Now the real hard part starts. Prove your customer will actually pay for your solution and pay enough to make it a viable business. We do a lot of thought exercises with our startups where we ask how much revenue they need to make to consider the company to have found product/market fit. Now divide that by the price of a monthly subscription, the initial price for the product or the money you can earn from advertising per user and you realise that it is much harder to create a viable revenue model than you think. 200.000 euro yearly revenue sounds like it should be doable, but if that means you have to sell a monthly subscription to 20.000 people, you suddenly realize it is much harder to achieve that.

Prove you can scale

We sometimes joke to early-stage startups that finding the right channels and growth engine are luxury problems, but they are real problems nonetheless. You have found your product/market fit and are selling to a range of customers, but now it is time to expand your customer segment slowly and prove that you can both reach them and that your problem, solution and revenue model also applies to them. Once again you make iterations through all of the 3 previous phases.

To summerise

Prove your problem: 3 months — money from friends, family and fools
Prove your solution: 6 months — pre-seed and angels
Prove they will pay: 15 months — seed and extended seed investments
Prove you can scale: forever! — series A, B, C

Managing Partner at NEXT Amsterdam. Startup founder turned investor.