How to get a foothold in a software market that needs many features to be built before making it 'sellable'?

I am planning to get into creating software for a niche industry. I see that there are some providers already in that space and has room for more. Looking at the quality of products in the market, I feel that I could build a much better product by studying the gaps in these products.

I have one problem though. I will be able to sell this software only if it has a certain minimal set of feature-sets. It will not be marketable unless it has those. I assume I have to go about building a product and hiring at least a few engineers to get the version 1 of the product.

What are a few techniques I should use in getting a foot-hold in a market where I have no proven track record? Neither have I worked on software for such niches before.

Basically, I am pondering over if I should move into that niche?
Before moving, what kind of strategy should I start with to get a foothold? What things should I do differently at the outset to achieve the above?

Start-ups are hard. really hard. The odds are against you. Why handicap yourself by choosing to niche market where you have no prior experience or specific "niche software development"? Why not start in an industry and with a platform that you have knowledge and experience?

If for what ever reason that is not an option, then here are some ideas for getting a foot-hold:

• Buy/Partner for Experience: Find someone with significant experience in your target market. Hire them if you can afford to. Partner with them if you can't. You need their ideas, experience, and credibility.
• Design around a beta customer: Develop a relationship with someone in the target market and design the product to meet their needs. Their practical experience is IP that you will embed into your product. Choose someone whose use of the product will earn you credibility.
• Buy Credibility: this is often very difficult to do in niche markets with well established communities and high context culture -- but if you have

If the above three seem out of reach, then I strongly recommend that you explore where you can build software in a market that you have experience and credibility, where your existing network of associates will providie your product/service the initial traction it will need to be successful.

I had the same issue (and am still having issues). I just had a good version developed, but it's been tough to get the funding to make a version with a professional look and feel and professional marketing materials. Just give it your best shot when you develop the program, and expect things to go slowly when it's ready.