Fundraising at pre-seed stage isn’t just about having a brilliant idea; founders need to pull together all the right elements to show that they are building a scalable, sustainable business. One of the first elements they need to get right is problem-market fit.

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According to an analysis of 100 failed startups by CB Insights, 42% failed because there was no market need. In other words, nearly half of these ventures were solving problems that did not matter enough to enough people.

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Source: Statista‍

What is Problem-Market Fit?

Problem-market fit is the bridge between what you are building and your audience's needs. To put it simply: are you solving a real problem? That’s an essential question to answer if you’re going to derisk your startup in the eyes of pre-seed investors.

Ivan Nikkhoo, ​​founder of Navigate Ventures, and principal at N3 Capital, speaks to around 25 founders a week, many of whom have already raised some level of venture investment and can articulate their product proposition in great detail.

And yet when Nikkhoo asks what specific problem they’re solving, the vast majority struggle to give a coherent answer. “They’ve fallen in love with an idea, built a solution, and are now searching for a problem to fit their product,” he explains. “It’s a topsy-turvy way of thinking that’s unlikely to deliver a positive outcome.”

It’s a classic case of innovator’s confirmation bias. This confirmation bias can often lead founders to dodge the big scary questions that might show up the cracks in their idea.

“All successful companies are started to solve a problem, but few founders spend time validating that it is even possible to build a successful company on the problem they choose to solve,” writes Sean Byrne, founder of Flurry, the first analytics platform for iOS and Android applications.

The problem-market fit signals VCs may want to see at pre-seed stage

• It’s a clear, urgent problem felt by a specific group
• People are already trying to solve it, inefficiently
• They demonstrate a willingness to pay, try, or switch

If you’ve got more sales than you can handle, it should not be too hard to demonstrate that your business is solving a real problem. But many pre-seed founders need to raise when their business is pre-revenue, pre-users or even pre-product.

In this situation, there's something you can do that sounds deceptively simple: talk to your (potential) customers. With the right interview techniques, you can build a bank of compelling insights on problem-market fit which you can present to investors, even before your product has launched.

Problem discovery interviews for idea-stage startups: The Mom Test

“For [a product] to surprise me, it must be satisfying expectations I didn’t know I had,” says Y Combinator founder Paul Graham. “No focus group is going to discover those.”

In other words: customers can rarely articulate their deepest problems or most valuable desires in advance. That’s why idea-stage problem validation is less about asking people for their opinion and more about understanding real behaviour.

In particular early-stage founders need to avoid false positives: well-intentioned people saying they love your startup idea – or even that they’ll definitely sign up – but never becoming users or customers.

The Mom Test by Robert Fitzpatrick is designed to cut through the noise in just this situation. It helps founders to ask questions that will show you if your idea doesn’t have problem-market fit, even if your interviewee is doing their best to avoid hurting your feelings.

​​Principle: Don’t pitch - never ask someone if your idea is good. In fact, don’t even talk about your idea. Instead, ask about their life, problems, and past behavior.

The approach:

• Focus on facts, not opinions
• Ask about their actual behavior, not hypotheticals
• Dig into how they currently deal with the problem

Example questions:

• “Can you walk me through the last time you dealt with [X]?”
• “What do you currently do to solve that?”
• “How much does this cost you (in time/money/frustration)?”
• “What happened the last time it didn’t work well?”

Listen for: "Hair-on-fire" pain, as Sequoia puts it. Find a problem that’s urgent, frequent, and painful enough that customers are already trying to solve it — however crudely. Are they saying they have a problem, but it turns out they’re doing absolutely nothing about it, or it only comes up once every few years? You may not have problem-market fit.

Be sensitive to the major assumptions behind your business idea. Fitzpatrick suggests asking at least one ‘big scary question’ - the sort of question you might avoid asking because you know that if you get the wrong answer, it may show your startup isn’t going to work.

Once you are done asking them about the problem, you can then mention your solution and gauge their interest – by asking for a commitment, not their opinion. If they say they love your idea, see if you can get them to place an advance order, commit to joining a pilot - or anything else that actually signals they are prepared to spend money or time.

Consider reading The Mom Test in full, it’s a quick read and full of actionable advice about running an interview process.

How this strengthens your pitch: If your interviews reveal that you’re solving a real problem, you should now be armed with evidence you can use directly in your pitch materials. You can summarise your results - “Spoke to 30 target customers; 23 of them had the problem; costing 23 hours per week + £250,000 per year”. Your interviews will likely also provide direct quotes you can include in your deck or pitch materials.

Building a Jobs to Be Done persona once you have users or revenue

If you have customers or users signing up and using your product, that should give you some confidence you are solving a real problem. But how well do you understand the problem you’re actually solving?

That’s where Jobs to Be Done (JTBD) may come in. The framework, popularised by Clayton Christensen and Bob Moesta, is designed to reveal the "job" your product is being hired to do - and build up a detailed profile of the factors affecting decisions to ‘hire’ your product (and ‘fire’ whatever they were using before.)

Principle:

People "hire" products to get a job done (make progress, or solve a problem) - but often they’re unaware of why they do so. By taking them on a detail-obsessive chronological tour through their decision to switch to your product, you can uncover key factors that influence customer decisions and reveal your real competitors.

The approach:

• Take customers on a journey from the moment they decided to purchase your product, back to the very first thought they had of finding a (new) solution to their problem, and all the steps in between
• Be obsessive about detail - ask about the context, what else was going on that day, who they were with - anything to bring their memory back to the relevant moments
• Like The Mom Test - focus on real demonstrated behaviours and evidence over subjective opinions
• Pay close attention to “push and pull factors” that promote decisions to switch, and habits and anxieties that hold people back
• For a classic example, listen to the mattress interview

Example questions:

• “Take me back to when you decided to purchase. What were you doing that day? What time was it? What was the weather like? Who else was there?”
• “Do you remember when you first thought of finding a solution to this problem? What was going on?”
• “What other solutions have you used before? Any others you considered along the way?”
• “What were you hoping this product would help you do?”

Listen for:

• The ‘trigger’ to buy the day they decided
• Push and pull factors for change: the struggle they were experiencing before; what pulled them to try your new product to solve the problem
• Habits and anxieties against change: the inertial forces of habit that prevented them from switching; what questions/reservations held them back from switching.
• What solutions did they try and ‘fire’ before? What did they consider but never switch to? Why not? This should help you to understand your real competition, and positioning.
• Try to define the job to be done - it could be functional, social or emotional.

Not yet got a product or customers? You can still do JTBD interviews. Just find people who have recently purchased a competitor product, and tweak the questions above accordingly.

How this strengthens your pitch: You haven’t just validated that you solve a real problem - you have a clearer idea of exactly what problem(s) you are solving - and for who.

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Do I need commercial traction to show problem-market fit?

At pre-seed stage, investors have limited expectations for market traction. In many sectors funding is available pre-revenue; in sectors with long R&D cycles or intensive regulatory oversight funding can be common before a product is even launched. With that said, anything that shows market pull for your idea is a clear positive.

Idea stage traction milestones

Even without a product, users or revenue you can still show traction by meeting relevant milestones. Here are some examples of evidence that might appeal to VCs:

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Letters of intent (LOIs): Shows real buyer intent, not just curiosity. Should feature credible, relevant partners (not just friends or small players). The clearer and more specific the agreement, the better.

Concierge MVPs/manual pilots: Show who the pilot was with, why they’re credible or representative of your target market, and any key learnings that inform the product. Killer quotes from participants are useful here

Kickstarter/pre-orders: Show who bought, how quickly, how many, and what that proves about market demand, willingness to pay, and your GTM potential

Sales pipeline: Be honest and upfront about the status of the pipeline. Don't just add up the potential value of everyone you've ever spoken to — be specific (e.g. 30 expressed interest; 5 in final conversations; 2 signed LOIs valued at £X)

A waitlist (for consumer apps): Consider including % growth over time, and where they came from (e.g. paid, referrals, organic).

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Early product stage milestones

If you have an active user base or you are generating revenue at pre-seed stage, you’re ahead of many. Here are some metrics that may help to demonstrate your progress:

Revenue growth (MMR)

Total MRR now vs. 1–3 months ago, MoM growth rate (%), and type of revenue (recurring vs. one-off, paid vs. freemium) are all relevant. £0-10k can be acceptable - funds invest pre-revenue. Even going from £1k-5k in a few months is a strong signal. 10% growth MoM is decent, while 15-20% is impressive.

Growth in active users (DAU/MAU)

DAU and MAU with % growth over time; DAU/MAU ratio (aka “stickiness”), and organic vs. paid growth. This reflects traction, market pull and word-of-mouth potential Bonus: Can you show that people are actively using the pain point feature?

Feedback / Testimonials

Do you have customer reviews or NPS scores? What about positive testimonials or reviews? Even 5-10 paying customers with glowing testimonials can make a difference.

Retention

In general expectations are limited at pre-seed stage. Any evidence that users are returning week after week or month after month, or any sign of repeat purchases is good - whatever you've got that can show people are sticking around

Speed of learning/iteration

If you’re testing a range of different things, find a way to quantify your rate of experimentation and tease out the big learnings.

Tailor validation milestones to your startup type

Different types of startups have different risk profiles, customer behaviors, business models, and paths to growth. VCs also have sector-specific expectations. Here is a general idea of the kind of traction that’s relevant on a sectoral basis:

B2B SaaS: Signed LOIs, paid pilots, early customers, revenue

Consumer apps: Waitlist signups, DAU/MAU growth, retention

Deep tech / Biomedical / Regulated Sectors: Pilot/partnership interest, LOIs from credible customers, grant wins, regulatory approvals

Marketplaces: Early supplier & buyer engagement, Gross merchandise value (GMV) from early transactions

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One marker to keep in mind - founder-market fit

Rubén Domínguez Ibar, author of the Substack newsletter The VC Corner, points out that VCs often ask: Is this the right founder for the market?

In the earliest rounds — where little else is validated — founder-market fit can be an extra marker of promise. VCs love to hear from founders that aren’t just solving a problem, but who have lived it. Not only will they understand the pain points in ways others can’t, but they will persevere when most others would duck out.

5. How to present problem validation to VCs

VCs can spend as little as 2 minutes and 12 seconds digesting startup pitch decks, either to prepare for a call with a founder or to decide whether a call with them is worth their time. Throughout that time, they will be asking themselves: “why should I care?”

So how can you demonstrate that you’re solving a real problem in your pitch deck?

• Succinctly state the evidence. What are the reasons you know you’re solving a big important problem for your customers or users? Whether it’s a clear pattern in your customer interview data, or a compelling traction metric - put it across in simple terms.
• Use quotes - If you spoke to 20 or 30 (potential) customers, there should be one or two key quotes that demonstrate you are addressing a “hair on fire” problem
• The power of storytelling - if you’ve got founder-problem fit, you can tell your story. Otherwise, you could try to tell the story of one of your customers or interviewees in a way that hits home.
• Use clear and concise customer language, and cut out jargon / buzzwords

Common validation traps to watch out for

• Vague problems, such as “knowledge sharing is hard”
• Claiming to fix too many problems simultaneously: Sometimes it makes sense to offer a holistic solution for a suite of problems, but it can also indicate a lack of focus. Even if you have identified seven real problems - can you show that the market wants the same product to solve all of them?
• Mistaking interest for commitment, or just kind words
• Overclaiming traction: “$1M pipeline” (but no signed deals)

FAQs

1. What’s the difference between problem-market fit and product-market fit?

Problem–market fit comes before product–market fit. It means you’ve proven a real, urgent problem exists — and that your target users are actively looking for solutions. Product-market fit means you’ve built something that solves that problem well and is gaining traction.
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2. How many customer interviews do I need to run to validate a problem?

There’s no magic number, but 15–30 interviews with your target audience is often enough to see patterns. Focus on quality over quantity — insights come from digging deep, not just collecting quotes. Keep going until you stop hearing new things.

3. What traction signals matter most to VCs at pre-seed?

It depends on your business model, but common signals include:

• B2B: LOIs, paid pilots, strong pipeline
• Consumer: Waitlist growth, engagement (DAU/MAU), retention
• Marketplaces: Both sides active (e.g. early GMV)
• Deep tech: Grants, partnerships, regulatory progress

4. What’s the best way to present problem validation in a pitch deck?

Keep it simple and specific:

• Show what problem you validated, who it affects, and how you know
• Use customer quotes and metrics (e.g. “23/30 interviews reported X”)
• Include any commitments (e.g. pre-orders, LOIs, pilot signups)

5. What’s the biggest mistake founders make when validating a problem?

Mistaking compliments for commitment. “That’s a great idea” means nothing without action. Focus on what people do — not what they say — and look for real-world signals like time, money, or behavior change.