Steve Orr, CEO of Catalyst, argues that UK startup development should prioritise rigorous customer validation, willingness to pay, and unit economics before building product. In a new analysis of the UK's scale-up problem, Orr contends that UK startup growth has two distinct challenges: one at the frontier (AI labs and venture-backed scale-ups in London and Cambridge), and another earlier in company formation that has received less attention.

The Case for Validation Over Velocity

Orr's central argument focuses on how the UK startup sector approaches product development. "The UK startup sector still relies heavily on Lean methods," he writes. "Lean was a major advance, but in the AI age its emphasis on early MVPs is becoming outdated. When building is now so fast and cheap, the greater risk is building too soon on the back of partial or poor customer discovery."

Catalyst uses an approach called Disciplined Entrepreneurship, developed by MIT. This approach emphasises what Orr calls "proof before product"—validating customer, market, economics and go-to-market thoroughly before building.

According to Orr, this validation must be thorough and specific. Companies should prove: the right first market, a painful customer problem, identification of both end user and economic buyer, willingness to pay, pricing strategy, competitive landscape, route to market, sales cycles, gross margin, and unit economics.

Critically, Orr emphasises: "Most importantly, it must show that customers can be won repeatedly without the founder dragging every sale over the line."

Why This Matters Now

Orr argues the timing is urgent because the constraint on startup success is shifting. "The scarce capability is no longer simply technical development. It is knowing what is worth building and proving that a market will pull it from you. Go-to-market is becoming the decisive constraint."

This observation applies across the board, Orr suggests. "How a company is created will determine whether it scales. That applies equally to a two-person AI software company and an academic spin-out commercialising complex science."

While jobs created and investment raised remain important outcomes, Orr contends neither proves that a scalable market exists. According to Orr, "Sales are becoming the clearest test, supported by extensive customer and commercial validation. Increasingly, that is also the evidence the strongest investors will expect before committing serious capital."

A New Model for Support and Funding

Through its partnership with the Martin Trust Centre at MIT, Catalyst is using Disciplined Entrepreneurship to build a "data-driven stage-gate model" for determining when a company has earned the next level of support. Rather than progressing companies because they completed a programme or impressed a panel, advancement depends on evidence of risk reduction and movement toward repeatable demand.

Orr suggests this approach could reshape how government and institutional funders evaluate their own programmes. "Government funders can now build a much stronger view of the return on investment from different mixes of support. By connecting intervention data with stage-gate progress and eventual outcomes, they can better understand what contributed to stronger sales, faster growth, more investment, international market entry and the creation of more Innovation Driven Enterprises."

Northern Ireland serves as Catalyst's test case for this methodology. Orr notes the region has "strong research, technical talent and companies that compete internationally" but also "a small domestic market, a thinner ecosystem and little room to keep funding activity that produces no evidence of progress."