* The following process is only valid for startups in B2C space. I'm not an expert in B2B.
Woah! You have a prototype (Or something close). Your next step is definitely Beta testing. NO!
Do realise the difference between testing and validation. Yes, you may have had run validation surveys or spoken to industry professionals to validate your idea, but now that you have a prototype, let's do some hard validation.
1. Let's pay for those Facebook ads.
Accept this: Your startup, no matter what it does, will need to use marketing is some way. At some point of time, your college friends, friends of your college friends or your professors won't be enough to grow your startup. They may not be your market on the first place.
Amazon Turk, Survey Monkey, Facebook Ads, all this will help you to acquire users quickly. Let's say you put in $10 dollars to acquire first 20 clicks to your website.
2. Measure the conversion.
If 1 out of 20 users who clicked the ad link becomes your customer, your conversion rate is 5%. But 20 clicks is too small of a sample. Let's raise that to 100. If you could still retain that 5% conversion rate, Awesome! (My guess is you won't!) If not, Let's do some A/B testing.
3. A/B Testing, here we come!
This phase will include probably writing 100 different ways to explain your startup in 30 words or less. This is called generating ad copy.
One you have atleast 20 distinct lines for your ad, let's test them. See if your conversion improves on any of the different lines. Track what demographic is pulled towards your high performing ads.
1. You now know your Customer. You have their demographic data.
2. You know your conversion rate. 0.5% is bad. 1% is good. 2-3%, you're god!
3. You know how fast you get those conversion. Note a high performing is not only defined by how much they grow, but also by how quickly they grow.
Now with this data, do your Beta testing. May the force be with you! :)