Most businesses these days have an idea for a product but building a product or a service costs money, and not all businesses have the capital to get their idea off the ground. This is where MVPs come in handy – by designing and building an MVP; businesses can test their concept with real users and raise money to fund further MVP development.
According to Statista, 25% of apps get abandoned after being used just a single time. At the same time, other apps grow in number, and the competition gets more and more tough.
Building an MVP is a great way to test your business idea without spending a lot of money. In this blog post, let’s look at how to build an MVP and its benefits for investors. We’ll also discuss how to raise money from the investors. So, without further ado, let’s get started!
What is a minimum viable product?
Minimum viable product is a concept taken from the Lean Startup methodology. The idea is to launch a product with a minimum number of features to get users’ feedback as quickly as possible. And also to validate the product idea early in the product development life cycle.
Undoubtedly, having an MVP solution is beneficial to reducing risk, saving money, and getting funding.
Benefits of developing an MVP
Several benefits that come with MVP development for fundraising include:
Investors can see the product functionality
When it comes to product development, the minimum viable product framework is essential to secure investment funding. Why? Because it allows MVP investors to see the product’s functionality and how it can be used to solve a real-world problem. By contrast, products that are still in the early stages of development can be much harder to sell to investors, as they may not be able to see the potential value in the product.
Additionally, MVPs can help ensure that products are developed in a customer-centric way, as they allow for feedback from real users to be gathered and incorporated into the final product. In short, MVPs are an integral part of the product development process and should not be overlooked when seeking investment.
Easy for the investors to see if the product is viable
The main purpose of an MVP is to test whether the product is viable in the marketplace. This means testing whether there is a demand for the product and whether users are willing to pay for it. An MVP also allows for user feedback, which can be used to improve the product before launching it to the wider market.
With the help of minimum viable product, startups can reduce the risk of failure and increase their chances of success. For investors, an MVP is essential as it provides a way to assess whether the product is likely to be successful. This information is vital in making investment decisions.
Investors can judge you have the right team
As any experienced investor knows, one of the most important aspects of any new venture is the team behind it. A strong team can make even the most challenging project a success, while a weak team is likely to fail no matter how good the underlying idea may be.
This is why many MVP investors place such a high importance on seeing a minimum viable product before committing to a new project. MVP app development can help judge that the team behind a new venture has the skills and experience necessary to succeed.
MVP development companies like Appinventiv have a wealth of experience in MVP building and can help give investors the confidence they need to invest in the product. So, if you’re looking to raise funding for your new project, make sure you partner with a company that offers MVP development services to help you create a minimum viable product that will impress even the most skeptical investors.
Investors can see your product commitment
Many investors are reluctant to invest in new products or companies because they fear that the team behind the venture will not be committed to seeing it through to completion. However, a minimum viable product allows businesses to gauge investor interest in the product and get funding to continue developing the product. The cost to build an MVP is typically less and are less risky than traditional product development, making them appealing to investors.
Minimum viable product also allows businesses to gather feedback from customers and make necessary changes before launching a full-fledged product. This feedback is essential for making a product that meets customer needs and stands out in the marketplace. By clearly demonstrating their commitment to the product, MVP for startups can increase their chances of securing funding and achieving success.
Businesses can prove their market awareness
As market analysis is an important part of the MVP software development, it also helps investors know that the team is aware of the market conditions and is capable of adapting to them. Minimum viable product is essential in seeking MVP investment as it allows businesses to test their product hypothesis with real customers and gather feedback to validate idea. This feedback is essential for refining the products and business model before seeking MVP seed funding from investors.
The minimum viable product also provides a proof of concept that investors can use to assess market opportunity and potential return on investment. MVP is a key step in securing funding from investors and proving market awareness. By taking the time to develop an MVP, businesses can increase their chances of success in the long run. Also, an MVP strategy could be a great option if you are thinking about MVP development.
Now that we know the benefits of having minimum viable product for the investors, let’s take a look at the steps to build an MVP.
How to build an MVP?
As business owners, you must have searched MVP in the search results, and yes, Google autocompletion says “MVP is dead,” “MVP is low” and so on. But we strongly disagree.
MVP building requires some MVP planning and thoughtful efforts, but it is a straightforward process. So, let’s move further to know the steps to build an MVP:
Do market research
The first step is to do your market research. This will help you understand the needs of your target market and what they’re looking for in a product or service. Many platforms that conduct paid surveys and can help target the right respondents for your MVP in business.
Identify your target market and user persona
Once you’ve conducted your market research, it’s time to identify your target market and user persona. This includes identifying the demographics of your target market and what their needs are. Various questions, like
Who is your target user? What are their needs? Why would they use this solution? need to be answered at this stage. If all replies are found correctly, it will help determine who your minimum viable product is for and what needs it should address.
Outline key features of your product
Now that you know who your target market is and what their needs are, it’s time to outline the key features of your product. This includes identifying the core MVP features that your product or service will offer. Remember, less is more when it comes to a minimum viable product. You want to focus on the essential features that will address the needs of your target market.
Build and launch your MVP
Once you’ve decided on the features list, it’s time to build and launch your MVP. This involves developing the actual product or service and making it available to your target market. When launching your minimum viable product, it’s important to focus on creating a great user experience.
This means ensuring your product or service is easy to use and offers a great user experience. It’s also important to promote your minimum viable product and get feedback from users. The feedback you receive will be invaluable as it will help determine what features to add or remove, and how to improve your product or service.
Analyze the feedback
Once you’ve launched a minimum viable product, it’s time to analyze the feedback and data. This will help understand what’s working and what’s not. It’s important to remember that minimum viable product will have flaws, and there will be areas that need improvement. However, the feedback and data you receive will help determine how to improve your product or service.
There’s no one-size-fits-all answer to building an MVP, but the above steps will give you a good starting point. Remember, the goal is to develop a minimum viable product that meets the needs of your target market. Now that you know how to build an MVP, the aftermath is to think about raising MVP investments for your app or a product.
How to find investors after you have developed an MVP?
The first and the foremost thing that comes to an entrepreneur’s mind during tough times is about how to raise money. So, if you have developed a minimum viable product and are now looking for potential investors, here’s what you need to do.
Research about potential investors
In today’s economy, it can be difficult to raise money for new products, mobile apps or services even if it is a great idea. One way to increase your chances of success is to research potential investors thoroughly. This means not only knowing their MVP investment history, but also understanding their goals and objectives.
By presenting a product in a way that aligns with their interests, you are more likely to secure pre MVP funding. Additionally, during times of economic downturn, it is even more important to be aware of the needs of potential investors. They may be more conservative with their money and more risk-averse than during boom times.
Focus on the future, not the past
When pitching your product to potential investors, it’s important to focus on the future, not the past. This means highlighting the potential of your product and its ability to grow in the future.
For example, if you pitch a new social media app, you should focus on the potential user base and how the platform can be used to connect people. The key is to convince investors that your product has the potential to be successful in the future and that their investment will pay off.
Create a pitch that resonates with potential investors
Once you have identified potential investors, it’s time to create a pitch that resonates with them. This means focusing on the aspects of your product that are most likely to appeal to investors and emphasizing the potential return on MVP investment.
For example, if your product is a food delivery app, you may want to focus on the growing online ordering and delivery trends. You can also highlight the potential for repeat customers and the loyalty of customers to businesses that offer convenient delivery options.
This can give investors confidence in your ability to launch the product successfully. By crafting a pitch that resonates with potential MVP investors, you will be in a better position to raise the money you need to bring your product to market.
Be prepared to answer tough questions
When pitching minimum viable product to potential investors, be prepared to answer tough questions. This means being honest about the risks and challenges associated with your product.
For example, if you are pitching a new food delivery app, you should be prepared to answer questions about the competitive landscape, the potential for customer attrition, and the scalability of your business model. By being honest and transparent about the risks involved, you will be in a better position to secure MVP funding.
Optimize your cash position
Finally, it’s important to optimize your cash position before pitching your product to potential investors. This means having a clear understanding of your burn rate and ensuring that you have enough cash in hand to sustain your business in the event that you are not able to raise money.
Additionally, it’s important to have a clear plan for how you will use the funds you are seeking. This will give investors confidence in your ability to launch and grow your business successfully.
To move forward, after having a good knowledge of the tips for success while pitching to MVP investors, it is important to have a look at the funding partners for the post-MVP stages.
Funding partners for post-MVP stages
Undoubtedly, the MVP stage is the most crucial for any business. But it’s not the end. To take your business to the next level and achieve long-term success, let’s look at the main type of MVP funding sources that are helpful to approach during the pre-seed funding and seed funding rounds.
Non-profit community development finance institutions
Many CDFIs have been created to invest in businesses in low to moderate-income (LMI) communities. While their primary focus is on economic development, they also have a mandate to invest in businesses that will create jobs and spur economic growth. As such, they can be a good source of funding that are looking to launch in LMI communities.
Government agencies and programs
Federal, state, and local governments offer a variety of programs and incentives to promote entrepreneurship and economic development. These can include loans, grants, and other forms of financial assistance.
Angel investors and venture capitalists
Angel investors and venture capitalists are typically high-net-worth individuals who invest in early-stage companies in exchange for equity. While they are typically focused on high-growth companies, they can also be a source of funding for a minimum viable product with high potential.
Crowdfunding is a way of raising capital by pooling small amounts of money from a large number of people. It can be a good source of funding for MVPs that have a compelling story and are able to generate interest and excitement among potential investors.
Friends and family
Friends and family can also play an integral part in MVP fundraising, particularly if they are supportive of your business idea and believe in your ability to succeed. However, it’s important to remember that they are also taking a risk by investing in your company, and as such, you should treat them as you would any other investor.
Building an MVP is a critical step in the process of raising money for your mobile app. By following the tips we’ve outlined in this post, you can create a product that will resonate with investors and help secure the funds you need to take your app to the market. Also, let’s not miss out that great companies like Uber, Airbnb, and WhatsApp started as MVP and now are the most successful ones. So, don’t let little things discourage you from seeking out investors for your minimum viable product.
Q. Do you need an MVP to get funding?
A. While an MVP can be a helpful tool for attracting investors, it is not always necessary. In some cases, a well-developed prototype may be enough to demonstrate the app’s potential and persuade investors to provide funding.
However, there are also situations where an MVP can be essential. For example, suppose the app requires significant investment in order to get off the ground. In that case, an MVP may be the only way to convince investors to provide the necessary capital. Ultimately, whether or not you need an MVP to get funding will depend on your specific situation and the type of app you are developing.
Q. What is an MVP funding?
A. MVP funding refers to the money invested in a product or service to create a minimum viable product. This is often done in the early stages of product development when the team is trying to determine whether or not the product is worth pursuing.
The MVP funding allows the team to create a prototype or beta version of the product, which can then be tested with customers. If the product is well-received, it may receive additional funding to help it reach its full potential. However, an MVP may be scrapped altogether if it fails to impress customers.
Q. How do you pitch MVP?
A. When pitching MVP, it’s important to keep a few things in mind. First, it is meant to solve a specific problem or meet a particular need. This means that your pitch should focus on how your MVP will address this problem or need. Second, MVP is typically very basic in terms of features and functionality.
This means that you should emphasize simplicity when pitching your app. Finally, MVP app development is typically much faster and cheaper than traditional app development. This means you can bring your app to market quickly and without breaking the bank. By keeping these things in mind, you can ensure that your MVP pitch is professional and effective.
Q. What is an MVP in business?
A. In business, MVP stands for a minimum viable product. This refers to the initial version of a product or service created to test a business idea with the minimum amount of resources and effort. The goal is to validate the concept with customers and gather feedback in order to improve the product before making a major investment. MVPs are often used in the tech industry when launching new websites or apps.
Q. How long does it take to build an MVP?
A. On an average, building an MVP may take approximately 3-4 months but this timing can vary as per the project and business requirements.