Founders raising funds prepare for all sorts of questions in pitch meetings with venture capital (VC) investors. But one question is harder to answer than most: do you feel you’ve got product-market fit?

Product-market fit (PMF) is hard to define. What are the signals that suggest you might have found it? And even if you’ve achieved PMF with a given customer segment, could you lose it again if competitors enter the space or if you pivot into new verticals or geographies? In this article we cover some of the big PMF questions, helped by insights from product leaders and investors.

Without revenue to show for it, you’ve not demonstrated clear enough PMF, thinks Olly Mardling. A former founder and product leader at companies including Signal AI, ClearScore and Bionic, Olly says,

If revenue is the most important factor of PMF, what other signals give founders confidence? “Really strong customer reviews are always a good sign,” says Olly. Lots of companies run regular net promoter score (NPS) surveys to gauge whether their customers would recommend your company to their peers. Olly adds, “As well as high NPS, look at what’s happening in your market: are you getting approached by potential hires who want to move from a competitor?”

Lily Petherick is Principal at Flex Capital, a pre-seed and seed specialist investor. Lily and her colleagues at Flex explain what traits or characteristics they rate highest. “One way of looking at it is founder-sector fit: does this founder know their space better than anyone else? If we’re confident this founder has a truly best-in-class perspective on their market, we’re much more confident they’ll be able to build a product with real market fit later on.”

Without a great product, it might seem impossible to find PMF. But solid user research can validate demand before engineers start building features. “If you’re trying to create a totally new category, it’s much more difficult to find natural product-market fit,” thinks Olly. “It’s definitely easier (although never exactly easy) to deliver an existing service or product in a new way. Organisations already have budget for those solutions, and your messaging takes shape a bit more naturally.”

Lily thinks that even pre-revenue, there are signs that an nascent product will be a particularly good fit for a market: “Even data points like the size of your pre-launch waitlist can help build a business case to invest more in the product you’re developing.”

The challenge for founders and other leaders is to appropriately prioritise the (sometimes conflicting) needs of the product and commercial functions. Ideally, they should be complementary: if product builds the right things, marketing and sales will both pick up momentum more quickly. But it’s rarely that simple.

“Product is a bit of a guessing game unless you have good data coming back from sales and marketing,” observes Olly. Many companies are tempted on occasion to over-promise on delivery timelines or to ask engineers to ‘hack’ a feature and ship it quickly in order to win a big new client. These tactics might deliver short-term returns, but threaten longer term product-market fit.

Before moving into investing, Lily was an early marketing employee at cybersecurity scaleup Tessian, which was acquired by Proofpoint in 2023. “We started hitting a ceiling of market fit with our first product, which stopped people sending sensitive information to the wrong people over email. When we developed our inbound threat prevention product, that added real value to our existing customers and strengthened product-market fit.” Rather than a dramatic pivot, understanding how to build on the strengths of the existing product suite made a big difference for Tessian as the company scaled up.

For early-stage companies, a highly generalisable product may actually make it harder to find product-market fit. Olly reflects:

The good news for founders hunting for product-market fit? “At a very early stage, PMF isn’t a deal-breaker for a potential investment. It’s great if startups can show they’ve got clear traction and demand, of course, but we tend to prioritise the founder first, identifying what their unique advantage is in their market,” says Lily.

A focus on the founder above all means that previous experience in the space you’re tackling is vital, especially in an era when more vertical AI applications are being launched every week. “If you’re building AI for, say, dental practices, your solution and product could be great but if you don’t have a background in the sector yourself, it’s much harder for VCs to believe that you’re going to be able to pick up on every one of your customers’ nuances and quirks,” Lily suggests.

The pace of innovation in your space matters too, but not in the way you might think. “Having competition in your space is good, as it proves there’s demand. But an extreme level of competition in a relatively new space makes it very hard to identify what makes each product stand out, and then to pick the likely winners,” says Lily.

If founders need guidance on product-market fit, should they turn to their investors first? Lily says,

Doesn’t Often, companies intuitively ‘feel’ when they’ve found product market fit. It’s measured in numbers, yes, but it also comes across in the tone of sales meetings, or in the organic referrals that customers make to their peers. PMF is just as much art as science, particularly in an early-stage startup environment when good quality sales and marketing data can be tough to come across.

Senior leaders can be tempted to try as many options as possible as they evaluate different potential routes to product-market fit. But any coordinated effort to nail a great solution at the right time for a given market, needs a high degree of symbiosis between the product and commercial functions. PMF is rarely an accident; it’s the result of close collaboration across the whole business.