Product-Market Fit (PMF) is the holy grail of early-stage startups and a key milestone in assessing the commercial viability of a product. In the context of due diligence, it indicates whether the company has built something people genuinely want—and are willing to pay for.

‍

Product-Market Fit is achieved when a product meets a clear market need and resonates strongly with a well-defined target audience. It signals that the company has found a repeatable and scalable way to generate demand for its product.

Key indicators of PMF include:

• High customer retention or usage
• Positive feedback loops (referrals, engagement)
• Strong revenue growth or early signs of monetization
• Low churn or high Net Promoter Score (NPS)
• Market pull rather than push-based sales

PMF is not a fixed state—it evolves as the product matures and the market changes. It’s especially critical in SaaS, marketplaces, and B2B product evaluations.

‍

In technology due diligence, Product-Market Fit is a strategic checkpoint for both product and go-to-market risk:

• Validates customer demand: showing that the product solves a real problem
• Reduces go-to-market uncertainty: by proving initial traction and user alignment
• Supports valuation: Investors assign higher value to companies with PMF
• Guides roadmap priorities: Features that drive adoption and satisfaction get clear focus
• Limits pivot risk: A company without PMF may need to realign its entire strategy

Assessing PMF involves analyzing user metrics, churn, usage patterns, and client interviews during due diligence.

‍