How Do I Get My MVP Ready For Investors While Keeping Costs Low?

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June 9, 2022

Even as entrepreneurs generate new and innovative digital product ideas daily and start-ups appear to spring up around every corner, the Bureau of Labor Statistics reports that 90% of start-ups fail, with 20% liquidating in their first year. In addition, 42%, nearly half of start-ups, fail because there is no market need.

Every day, we see the birth of new businesses. Many of these start-ups have brilliant ideas to share with the world. Still, they frequently cannot reach their target audiences or investors due to a lack of funding.

Today's blog will focus on how start-ups can mitigate this failure by spending less money, launching sooner and learning what the market wants earlier. The thought of raising investment should be forgotten about until your start-up has validated that there is a market need.

What Is An MVP?

Firstly, let's start with the basics. A minimum viable product is the most basic form a product can take to validate your value proposition. It should allow you to soft launch and collect valuable customer feedback on what works and doesn't. If well-designed, your MVP will provide invaluable insight into whether your target market is ready and willing to adopt a product, service, or application.

An MVP lets you get feedback from potential users before investing time and money into creating a full version of your product. Then, once you have collected and structured your feedback, you and your team can go away and decide whether to iterate and improve or pivot. 

Some Tips to Help Get Your MVP Ready

Your MVP should take a maximum of four weeks.

Spec out your MVP so you will finish in four weeks. What can you realistically get done in four weeks? So many start-ups take months and months to release a first initial version, and then it is too late. Think the following questions: 

Speak to users

Get user feedback as early as possible in the process so you can iterate or pivot at the earliest point. As impressive as your idea probably is, try not to get too emotional about your idea. Instead, speak to prospective users and find out what they want, which is a win-win as you improve your product whilst potentially getting a customer. Combining Eric Migicovsky's video on How to Talk to Users and Keenan's Gap Selling strategy could set you up for great success.

Do things that don't scale

Do things that don't scale, Paul Graham.

Technical debt at this stage doesn't have to be that bad. Ask yourself

  • Do you need to set up your cloud infrastructure on day 1? 
  • Could you switch your database to a basic spreadsheet that takes minutes to configure instead of days?

In the early days, Airbnb used to go around host's homes and take photos themselves because they knew they could take better photos. Of course, they couldn't do this forever, but it was a great way to build something they knew people wanted.

Airbnb's initial website didn't even have payments!

Airbnb's MVP in 2008


Know Your Market and Define Your Business Objectives

Products do not succeed by chance: They thrive because they fulfil a specific and well-defined need. They solve a genuine issue. A "product design sprint" can thus be very useful in the early stages of setting goals and identifying a target user base. You'll need to invest time and money in extensive market research. Speak with the people you want to reach out to — investors, experts in the field, ideal users, and so on.

There is no doubt that similar products exist, which is fine: the goal is to identify what is lacking in existing solutions and develop your "secret sauce" that improves on them. Serving a specific niche is a great way to gain a competitive advantage over competitors and further focus on a product and target market.

Create a Success Plan and Indicators

You won't know if your MVP is successful unless you establish some goals and parameters. Regarding product development, key performance indicators (KPIs) must be established to guide you as you build. Based on the results, you'll be able to make informed decisions about what to develop further and how to allocate your time and resources best.

You'll learn a lot as you finally start coding and building your product. As product development and the MVP progress, make the most of this time by highlighting your product to users, showcasing it to investors, and gaining the valuable traction required for a launch. Use your KPIs to track your progress. Finally, test, test, and test again to ensure maximum performance and that your target market will accept the product positively.

Solve one problem and solve it well

Start solving the main problem and avoid adding new features unless. This is called feature creep. This helps you stay laser-focused. Can you realistically build a desktop and mobile version product at the same time? Probably not. Release one where your users are the most and continue to speak to your users and let them drive your product roadmap. A great blog by Rahul Vohra at Superhuman explains how to get to product-market fit.

Pick a metric and focus on growing this metric

VC funding isn't for every business; millions of companies are founded yearly, but only a tiny number are start-ups. Most are service businesses such as restaurants, barbershops, plumbers, etc. These are not start-ups, except in a few unusual cases. A restaurant isn't designed to grow fast, whereas a social media platform is.

VCs want an exceptional return on their investment, so it is essential that your investors can see signs of very early growth at your start-up, so pick a primary KPI and focus only on growing this by 5-10% each week. This primary KPI is usually revenue, users or an engagement metric. If you are too early for revenue, think outside the box. Can you create a waiting list or get customers to sign trial contracts? If either of these can calculate future revenues, then even better. When setting tasks for the week, ask yourself, will this grow my KPI by at least 5%. 5% doesn't sound a lot, but it compounds, and you have a high-growth start-up before you know it.

Tips for Targeting the Right Market While Getting Your MVP Ready for Investors

Consider how to sell an air conditioner as a minimum viable product in Antarctica which is a challenging task. The same rule applies when a company is on a mission to create an MVP. No matter how good the product/service is, it will fail if the company cannot solve the other half of the equation: identifying the best target market for the MVP.

Most start-ups begin by developing an MVP under the guise that "everyone" will rush to buy their products or sign up for their services. They quickly became one of the primary sources for various studies and research. According to this HBR report, 85% of 30,000 new product launches failed due to poor market segmentation.

Analyse the Competition

It is critical to conduct extensive competitor research to determine what the product will face. Building an MVP that does not already exist in the market is nearly impossible. Even if a start-up has novel ideas, it will be joining an already established and competitive industry. As a result, they must figure out how to position their Minimum Viable Product within an industry where competitors are already doing what they are attempting.

To find out, the start-up will need to conduct competitor research. Examine their strengths and weaknesses. Determine their target audience and what they have to offer them. The start-up should focus on a small segment of customers their competitors have overlooked or feel their solution is 10x faster, cheaper or better overall.

Find your first customer type

What user has the biggest pain problem you are solving? If Facebook launched globally from day one, we probably wouldn't be talking about them now. Instead, they found a small set of users at one university, all with the same problem of not being able to connect to friends anywhere in the world. Once they master one university, it is very easy to scale to other universities globally.

The same goes for B2B start-ups. If you are launching a digital receipt company, it won't be easy to sell to supermarkets without some case studies to back you. Start with the easy customers so you can sweep the market, then scale.

Segment the Customer Base Geographically

Once the start-up has identified the appropriate customer base for the MVP, the next step is to concentrate on geographical segmentation. Companies use this efficacious tool to get intimately familiar with the location-based attributes that comprise a specific target market. Analysing the location of the ideal customer base could be a real game-changer while on the route to building an MVP.

For example, why start the search in Southern California if the minimum viable product is a winter jacket? At this location, the winters are mild to warm.

Target consumers in different geographic regions have different needs and cultural characteristics that can be targeted individually for better and more efficient marketing. Once the start-up understands the geographic location of its target customer, it can better design its MVP by answering critical questions like:

  • What is the impact of the climate?
  • What are the most common languages used?
  • How do cultural factors impact life?
  • What is the local retailers' role in your MVP?
  • How can you encourage engagement?


Determine the Motivation for a Purchase

After geographically segmenting the customer base, the next step is understanding their purchasing motivation, which will assist the start-up in precisely balancing its MVP positioning.

The simplest way to accomplish this is to conduct a survey. Then, create relevant questions that revolve around the above points while keeping the Minimum Viable Product in mind. Once the survey is completed, it can be distributed in various ways, depending on the budget.

What Can I Do To Launch My MVP Quicker?

"Time is something that cannot be bought, it cannot be wagered with God, and it is not an endless supply. Time is simply, how you live your life" NBA Legend, Craig Sager.

Time is your best friend and enemy at a start-up. You can move faster than your behemoth competitors, but time is money, and money will eventually run out, so it is critical to get an MVP launched no later than four weeks.

  1. Let's imagine you are building an electric car. Now it will be pretty much impossible to design and build an electric car in just four weeks, let alone get approved by the legal authorities, but that doesn't mean we can't release an MVP in four weeks. We could launch a website with information and designs on what the electric car will look like, what features will be in version 1 and pricing. We can then create a waiting list and test if the market is ready, and calculate how much revenue we expect to make. This will also help drive your start-up's valuation.
  2. Launch a no-code or low-code working prototype. In most cases, a website won't be enough, so get your product in your customer's hands earlier by building a product without writing a line of code. Dexla lets start-ups launch in hours through its low-code tool.

What Is The Difference Between No-Code And Low-Code Tools?

While similar in terms of output (ideally, a fully operational piece of software), no-code and low-code development tools differ in several ways.

The following are the primary differences between no-code and low-code tools:

  • Because no-code is generally aimed at non-technical users, it is frequently more user-friendly, at least on a high level.
  • Low-code is typically aimed at users with a technical background and software developers who want to avoid the more mundane aspects of the development process.
  • No-code platforms typically operate as a closed ecosystem, which means that any customisations made by a user will remain functional indefinitely. Because of the introduction of hand-coded elements in low-code, version-to-version compatibility is not always guaranteed.
  • No-code platforms are frequently aimed at specific business use cases, such as website or database development. Low-code, however, has a broader scope and promises custom tweaks for each customer.

When To Use No-Code, Low-Code Or Code?

  • No-code tools like Softr are great if your data is in a spreadsheet. They can be very basic, so upgrading to at least a low-code tool when you have validated your business model hypothesis will be a good idea. Dexla is predominantly a low-code tool, but test data can be generated, so it could work as a no-code tool too.
  • Low-code tools are great if you or someone in your team is technical as they enable you to have customisation while writing no or very little code. Launching a web app with Dexla can be extremely fast if you have UX designs and APIs.
  • Coding should only be considered if your product can't be built with a no-code or low-code tool. For example, it would be very hard for the iPhone or a Tesla car or space rocket software could be created with a no-code or low-code tool.

How Can A No-Code Tool Help Validate My Start-up?

The no-code movement is sweeping across every function within tech-enabled businesses, not just founders and indie hackers.

For example, many founders use no-code MVPs to validate their business models and test the market. It's easy to understand why. No-code development is less expensive and faster than native development. The time and money saved can be used to market your product or communicate with customers.

No-code MVPs make it easier to stress test ideas and determine whether you have a solid business foundation. They shift a founder's focus away from how they're going to build it and toward why and what they're building, reducing friction during the critical validation phase of an idea.

How Can Low-Code Tools Help Me Save Costs, Scale, And Secure Investment?

Low-code development can save businesses hundreds of development hours, reduce development times by 50-90% compared to developing an application from scratch with custom coding, and reduce IT costs by up to 20%. As a result, it aids in the resolution of several common issues that stymie digital transformation efforts in many organisations.

Increased Agility

Low-code development shortens the Software Development Lifecycle (SDLC), allowing your organisation to respond to market or business changes more quickly than if your development team had to code everything from scratch.

According to PMI, low-code makes it easier to include non-developers in the development process, which most highly agile businesses excel at. For example, a developer can quickly create a sample app for business teams to evaluate because low-code software development is visual. This shortens the feedback loop and helps improve the finished product.

Reduced Project Backlogs

Because they can't find the right talent or software to address business opportunities quickly enough, many enterprises have project backlogs that cost them billions of dollars in sales opportunities. Low-code can help reduce costly backlogs by allowing your development team(s) to complete more work in less time.

 

Enhanced Scalability

Low-code development transforms application elements such as user interfaces, integrations, and custom logic into visual building blocks that developers can re-use by dragging and dropping them into the design interface. Because a developer can build something once and implement it everywhere in minutes, a low-code approach often simplifies the work required to scale and maintain custom applications across an entire enterprise or for millions of customers, depending on the platform.

More Time for Developers to Innovate

According to a Stripe global study, maintenance and dealing with technical debt consume nearly 75% of the average developer's week. Low-code development reduces the burden of updating legacy systems and accumulating technical debt by simplifying the work required to scale and maintain software.

As a result, low-code can free up developer time for higher-value projects, such as discovering new ways to innovate for your employees (which reduces their need to find their own software solutions or customers.

Conclusion

Now that you know how to get your MVP ready for pre-seed and seed-stage investment in the most efficient way possible, it is time for you to take action, speak to your users and build your product. You will have a waiting list of investors - the Y Combinator Startup School gives you incredible insights on how to grow your start-up from idea to MVP to investment.

As an entrepreneur, if you or someone from your team has some technical knowledge about APIs, Dexla can save you money on front-end software development by allowing you to build and launch professional, scalable web applications on your APIs in hours.

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