I had a pre-launch startup in the pet category contact me with a product idea and a website created around the idea.  They were trying to raise money from investors for a seed round to produce a small number of units to sell.

I personally did not think much of the idea, but what I think does not matter.  What did the market think?

The company had a lot of secondary research about the problem but no primary research to indicate that their solution would solve the problem in a way that would interest consumers to purchase.

This is a problem for them, especially if they are trying to raise money for an idea that has no primary market data to indicate it will succeed.   And, this was not an experienced team, but first-timers in the startup world, so that was another big strike against their prospects.

My suggestion for testing a business idea with no product was to understand what the market thought of their idea.  Here is how:

  1. Setup a landing page with basic copy and product images through a unique, actionable URL;
  2. Create a call-to-action to get people to sign up to receive emails when the product launches;
  3. Buy some traffic and run it to that page and do some basic A/B testing to improve email signup conversions;
  4. Take your ad clicks and divide by signups to get conversion rate.  Assume 20% of signups buy the product.  With these assumptions plus your ad cost, you can arrive at some assumptions about interest.

Responders who sign up for emails are certainly not purchases, but they are still people who care enough about what you have to give their email address.  That means something.

The only good thing I saw going for this company – besides a lot of secondary research to indicate the problem – was that the SRP for the unit was pretty high.  This means that with less traffic, they can still drive good revenue, versus a lower priced product where they need a lot of traffic to drive top line revenue.

See this quick and easy conversion model with some assumptions I threw in, but replace some of these variables with actual results.  If you start to see ROAS results that are 4+, then you might have an interesting idea that might increase investor interest.

If you do not, no matter what kind of A/B testing you do, then you might want to go back to the drawing board to come up with a better idea.