The early life-cycle of a startup is all about validation. Especially for first-time founders, the struggle is often to figure out what’s missing or what can be done to convince an investor to take a chance and invest. Whether looking for funding, or convincing a prospect to become a customer, startups must provide outsiders with ‘reasons to believe’. Unfortunately there are only a handful of ways this can be achieved.

In this case I have made an attempt to highlight a hierarchy of validation points for startups during the fundraising process based on my own personal experience. It’s my belief that this is roughly the rank order by which people (particularly investors) will evaluate the worth and/or potential of an early stage company.

Note that as you move up the pyramid, the degree of validation increases. Also note that the product itself is not really ever the focus. I think in today’s world, a quality product is really second to eyeballs, revenues and relationships. A weak product can always be made better – Twitter is proving this right now as it actually has contracted out to redesign its entire product.

Are these validation points the only things that matter to an investor? No. However, they should serve as a good reality-check for the milestones a startup should focus on in order to get that investor(s) to emphatically say “yes.”

Update: Good post on getting validation on the localglo.be blog. Hopefully this becomes a meme because it’s a critical discussion for first time entrepreneurs

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