Insights & Trends

Where do venture ideas come from?

Insights & Trends

Where do venture ideas come from?

Words Samuel Rueesch

June 6th 2023 / 8 min read


“Good ideas are nothing without execution.” — The Founders Factory Venture Design Handbook

It is true, yes, that no idea is inherently good: their success falls down to how well they are executed upon. That said, good ideas are the result of methods and processes that lead entrepreneurs (or indeed venture designers) towards something that may one day 1000x their investment.   

For many founders, the genesis of a startup is organic: working in a particular field with a deep understanding of a space often presents a clear set of problems to solve. 

By contrast, our Venture Studio specialises in proactively identifying opportunities and designing concepts for new startups—and over the years we’ve developed strategies and methods for doing so effectively and at scale. 

Successful startups are a product of multiple factors—ambitious teams with new solutions and technologies colliding with market forces and a multitude of unknown variables. No path is straightforward or without risk, however the most successful new ventures follow rules and guidelines that we will discuss in this article. 

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Before we explore the recommendations, I would like to make a distinction between concepts and concepts spaces: 



Concept Spaces

Concept spaces are broad areas of a certain sector or industry which act as a starting point for developing and brainstorming new ideas. For example, insurance solutions for an ageing population or SaaS for independent healthcare professionals. In Venture Design, these allow us to segment a broad vertical like fintech or health into smaller components, making it easier for us to perform research activities like competitor mapping or market sizing while also leaving our focus wide enough to explore multiple potential directions. 

Concepts

On the contrary, concepts are actual startup ideas with a clear solution for a problem. As the term ‘concept’ indicates, they are still very conceptual and abstract at this stage. We want to keep them simple which enables us to develop many of them in a short time frame.

Making the distinction between concept spaces and concepts is important, as it allows you not to become overwhelmed by the sheer amount of possibilities and areas that you could consider for your next venture. 

1. Choose a boring or growing space

When choosing the right concept space it is smart to prioritise spaces that are not experiencing a moment of hype. Buzzy areas that follow popular trends are risky. They attract a lot of competition, and if you don’t get your timing on the hype wave right, you might get crushed by it. 

Many great founders follow a contrarian approach to building their startups, by starting to build in spaces that might seem very boring but are solving important and scalable problems. For example, after the consumer fintech product hype cycle crashed in 2022, we saw many founders building in the infrastructure layer. These may not have been as interesting as neobanks or BNPL solutions, but they’re no-less interesting solutions and potentially far more profitable.  

2. Choose a space that you are familiar with

Think about your professional or educational background before choosing a concept space. Although your past experiences shouldn’t limit the spaces that you look at, it is reasonable to consider which skills you have that might lead to a particular space. This can allow you to move much faster as you don’t have to build out a lot of additional knowledge or network since you most likely already have it. Furthermore, it shows a great founder-market fit as you most likely empathise with the problem that you are trying to solve—this will chime well with investors. 

One of our Venture Studio businesses, home retrofitting platform Furbnow, was founded by Becky Lane. On top of a Master’s in Sustainability for Energy Provision and Demand Management, Becky has years of experience working in clean energy transition and home decarbonisation. This cued her up perfectly to build a product that helps solve problems on both the supply side and the demand side of the home retrofitting process.

3. Choose a space where you can pivot quickly

Throughout the process of finding an idea for a venture, you will change the direction multiple times. The solution that you develop at the start is just the beginning—a starting block to help you get going. 

But as you continue along the journey, you will learn new things, you will experience challenges, and there’s no doubt you’ll have to pivot multiple times. 

Choosing a concept space that can lead to multiple ideas will help keep your options open and gravitate towards where the waters are moving fastest. You should aim for a large space, in terms of market size, with many problems that are still unsolved.  

4. Change means opportunity

Often when a concept space is ripe for multiple startup ideas, it is a reaction to a recent change in technology, an unprecedented force that redefines certain market conditions (e.g. a pandemic) or changes in regulations. Examples could include a new technological advancement that makes a process more efficient (e.g. large language models), or a new policy that incentivises or liberalises a certain market making entrepreneurship more appealing (e.g. legalisation of marijuana). 

These changes in the macro environment can help entrepreneurs to challenge the incumbents by being able to offer a better service and experience. Whenever you choose a space ask yourself: “Why is RIGHT NOW the time to build in this space?”

Econest, a business to spin out from our Mission Studio, was built to capitalise on the opportunity around home decarbonisation. The UK government passed a law to ensure all private properties must meet a minimum standard by 2025. Many landlords cannot afford these renovations themselves, and will look to sell as a result. Econest plans to buy and upgrade leaky properties, before letting them out as a sustainability-first landlord. For them, timing is everything, hitting the curve as landlords are forced into selling.

5. Surround yourself with information 

Once you decide on concept spaces that you find promising and exciting, you should start to fully immerse yourself in them. Read as much as you can about the topic, speak with people that know more about the topic than you do, speak with potential customers (especially ‘power users’), follow interesting people on Reddit, and join niche communities. The more information you consume, the better. At this stage, you should optimise for quantity of information rather than quality. Once time passes you will naturally avoid low-quality information, but at the start, you don’t need to be too selective about it. 

6. Focus on problems rather than solutions 

On your exploratory path, it is important to centre your attention on problems. Don’t rush into a potential solution or fully-fledged venture ideas right away. Instead you should prioritise spotting the unmet needs that your potential customers are feeling. 

Finding a great problem to solve is the foundation for any potential venture. Once you have one, it is going to be much easier to experiment with solutions and to create a plausible narrative for your business. The problem that you are trying to find and solve is the foundation of any business—it will be your north star—so if the problem is not there then why even bother creating a startup? 

Richard Dana honed in on a clear problem around the property market, exhibited perfectly in London where he lived. “On the one side of the road, you see a lot of nice big houses, and all the people who live there are older. The value of the properties has gone up and up, but the money is locked up in those properties, so they’re just sitting on that value. On the other side of the road, you see these shared houses with several young professionals living in them who earn good salaries but can’t afford to buy their own place.” From this problem he sought a solution that would help first time home buyers tap into the value of older generations’ properties—enter Tembo.

7. Be the catalyst rather than the inventor

Often founders obsess over building an idea which is exceptionally creative or innovative—but this can be very limiting. The most beautiful ideas for businesses are often very simple and basic. Most of the time ideas don’t even have to be “generated” by the founders themselves, they already exist. 

Founders should aim to become catalysts for ideas, not inventors. Listen to users, listen to experts, listen to your potential competitors, they know what is working and what is not, and you should use and synthesise their knowledge in your solution. Ideas are all around us, you just need to catch them. It is the founder that develops the idea, but the ideas themselves are already in your surrounding environment and the actors within it, so you just have to listen and act. 

8. Keep a log of everything

At this stage, we are looking at quantity not quality of ideas. Don’t be too critical of yourself and try to be open-minded. Explore any insights or problems you encounter. And to keep track of all the threads and ideas you might be following, log them in a spreadsheet. Even better, categorise them, structure them in a way that you can filter them by problem, solution, opportunity size, and difficulty to build. Use a subjective rating score as well to start to prioritise and highlight the ones that you like the most. But again, save everything, even the really bad ideas—often bad ideas can turn out to be the best.

9. Share your thinking 

The last stage is to share your ideas and findings with your network. Don’t be afraid of sharing anything. Ideas by themselves are pretty much worthless, so there is no point in hiding them. The more opinions and feedback you collect, the better the idea will become. But be aware of not listening to everybody: you need to be receptive to feedback but have a healthy degree of assertiveness.  

As I touched on in the beginning, finding ideas for startups is an art rather than a science. The world in which we live is just too messy to have a deterministic recipe for it, but maybe that’s exactly what makes it so addictive. Endeavouring on an entrepreneurial journey, finding ideas in a messy and chaotic world is beautiful, and frankly, a lot of fun. 

But while finding ideas might be more of a form of art, testing and validating startup ideas requires much more rigour and structure. More on that in our next article…

Think you've got an idea worth developing further?

Find out more and apply to our Venture Studio

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About Sam

Sam Rueesch is a Venture Designer at Founders Factory, generating and validating concepts with our corporate partners to go through our Venture Studio. He has an MA in Service Design from the Royal College of Art.

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