Revenue -- and especially revenue that is growing within and across customers -- is the best market validation. However, investors don't necessarily need to see revenue to make an investment. What they need to prove is that (1) the problem you are addressing is an acknowledged pain point by customers; (2) that customers believe in your vision; (3) the potential market opportunity is significant. When an investor calls up a customer for diligence, these are the questions they will be asking. Even if you don't have paid customers, you can demonstrate market validation using these tactics (in decreasing order of effectiveness):
- Having "Letters of Intent" : This is a conditional agreement signed by the customer. That if you prove out X, Y, and Z, the customer is likely to buy.
- Showing a "Qualified Pipeline". This is the aggregate value and types of customers in your pipeline, qualified by a defined criteria set (e.g. Has Budget Approved or Certain Market Cap of Company or Current Spend level).
- List out "Customer Development Partners": These are any customers on your advisory board, or customers you have done needs discovery interviews with. Ideally these should be open to doing a call with the investor if pressed, and validating that the pain point is significant and your vision is compelling.
Showing names or aggregate demand with the ability for investors to do direct diligence can be compelling to investors, especially if they believe already in your thesis.