I've once again been asked about what I've come to think of as the proxy issue. The potential angel investor is interested in the business. It's clear that the idea is novel, at least to the investor (whose market knowledge may not be fully informed).
The entrepreneur - i high integrity scientist - offers the following kinds of proof of the market.
1. I've gotten a grant from some referred source for this business/idea;
2. Angel group ABC says they are interested and will co-invest;
3. Our management/staff/advisors are working for reduced salaries;
4. Our key suppliers, such as lawyers and accountants, are deferring billing;
5. The product idea meets or exceeds the gold standard for other products in this space. Other commercially available products are (we acknowledge) clearly less adequate for important reasons.
6. I have a patent application in process and my attorney says it is very strong.
These are all nice to knows and cannot help but pique the investor's interest. They are important for the investor to know and for the scientist to report. But they are not a substitute for firsthand market knowledge and scientific validation. These questions only get answered by a process of drilling down, first with the company and the entrepreneur (Where are the risks? What do you worry about? What will the next big breakthrough be? etc.) and then with the market and the proposed customer.
The whole process of impartial scientific validation is also critical. Not only do we want to know whether the science will perform as described, but also whether it has known or perceived flaws that will not allow it to perform in the market as planned. We also want to know how we learn of general or specific trends that will eclipse this concept.
Finally, is there any scientific discovery still required in the remainder of the task to get to market, or is it all engineering? Engineering is a known process; scientific discovery has high risks.
This is a long way of saying that nothing offered by way of a proxy for the process of actual validation will reduce investor risks adequately.