Is the verdict on FMF or PMF out for early-stage?


There’s been a lot of talk in the ecosystem about which one is better: The old-standing (and Marc Andersson's favourite) Product-Market-Fit or the newly arrived Founder-Market-Fit. 

As with most things, we at Windrose Capital are careful in our classification of both the terms knowing fully well that with time these definitions will also change. 

Many long-standing and established investors have gone to great lengths to argue that Product-Market-Fit is a more important and integral factor in a startup's success than Founder-Market-Founder. However, with the markets constantly changing and evolving, perhaps a new verdict is out:

Founder Market Fit > Product Market Fit

We’d like to reiterate that at early-stage startups, FMF may pose to be an important factor as it establishes that the founder will be well-equipped to deal with any kind of challenges that come their way. However, PMF is a better indicator of the startup’s success in later stages when they need to differentiate themselves from their competitors. 

Sometimes, at an early stage, you can have everything: great product (and PMF), founding team, PR and even funding. But many such startups also see failures because they are lacking a certain charisma with regards to FMF. This has become even more common these days, as founders are constantly disrupting established industries and are branching into unchartered territories. 

Since the markets are continuously evolving, it becomes far-fetched to expect that founders know ins and outs and know their products extremely well.

In such instances, where nothing is defined, experts have found that FMF can be a great qualifying factor. FMF is claimed to be “an innate, unfair advantage that sets founder apart from their competition” 

Especially at early stages in new industries, when there isn’t enough data or metrics to validate the efforts, investors often rely on looking for founders that are absolutely obsessed with the problem and are 100% committed to solving it.  In fact, currently, a lot of founders are building successful startups in products that they have no prior experience in. This is only possible because of few traits that they may embody. Few aspects that can help such founders distinguish themselves are:

  1. Obsession

  2. Founder Story

  3. Personality Traits

  4. Experience

Founder-market fit is real when a founder knows enough of the market to see a real opportunity while knowing how hard it’s going to be. At the same time, founders need to have a bit of rebellion, a bit of chutzpah, a bit of boldness, the ability to envision the bigger picture, and loads of optimism. 

For us, at Windrose, Founder-Market-Fit is still an important factor, since we mainly seek to work with disproportionately mission-driven founders. However, we place more emphasis on Product-Market-Fit in our investment decisions, since we believe this is the key factor that’ll help in growing the business to new heights. For us, FMF serves as an indicator “of whether a startup will achieve product/market fit”. 

Watch more of Rohit’s views on PMF/FMF here