Riches in Niches

This post was originally published on VC Cafe

Eze Vidra

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niche: a specialized segment of the market for a particular kind of product or service.

Not all businesses are a fit, or require venture capital. But for fast scaling tech startups, to attract venture capital, they will need more than greeat tech and a strong founding team. Choosing the right market for a startup is paramount. Venture Capital investors look for ‘Big markets’, ideally multi billion Dollars in size and growing. In contras, a ‘Niche’ is ‘small’ by definition. In the beginning, all startups start small, and so should their initial market.

What’s the right niche?

Typically the right niche will be in what others consider to be a ‘boring’ vs. a hot space. A good niche can be an overlooked, underserved group of customers who are actively looking for better solutions.

In the 4 steps to the Epiphany, Steve Blank talks about customer discovery extensively and defines the the early users of your product as ‘Earlyvangelists’ -

Earlyvangelists = Early Adopter + Internal Evangelist

Earlyvangelists are a special breed of customers willing to take a risk on your startup’s product or service. They can actually envision its potential to solve a critical and immediate problem — and they have the budget to purchase it. Unfortunately, most customers don’t fit this profile.

Perfection By Subtraction — The Minimum Feature Set, Steve Blank

What is in common for all earlyvangelists of your product:

Characteristics of an early adopter (source: Steve Blank)

Paul Graham, founder of YCombinator, notes that to get those first customers, you have to do things that don’t scale:

“The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them.”

Do things that don’t scale, Paul Graham

How small should a market be to be considered a good niche? The answer is small but not non-existent. According to Peter…

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Eze Vidra

Managing Partner at Remagine Ventures. Founder of Techbikers, Campus London and VC Cafe, proud Xoogler. On the boards of Chargifi, HourOne, Vault AI and EchoAR