How to build an MVP that can get your startup funded

An MVP is simply put the least complex version of your product or services that still has the ability to generate any amount of value.

MVP goes beyond the idea of prototyping. An MVP is meant to serve as the litmus test of your product idea. By providing an MVP to the market, you can determine how viable and successful your idea might be.

It answers questions like "Will this help in solving a particular problem?" and "Is it valuable enough for people to use it or pay for it?" Apart from that, it allows you to gauge customer feedback and refine your ideas according to that feedback.

Another tough task while developing a startup is securing funding for your business. There are hundreds of startups that approach investors and try to get their attention. However, the question is – what makes your startup stand out? Of course, it is not your passion or vision but rather your story.

An MVP is like a trailer for your startup story that convinces investors that people will actually pay for your product or services.

It also serves as evidence that you've done your homework, identified a problem worth solving, and that people are willing to pay for your solution.

But why is it necessary for you to spend your time and money on an MVP before looking for funding sources? There are plenty of reasons for that.

• Risks management

Having an MVP will enable you to avoid making mistakes and spending all of your money while working on a fully-fledged product. Trying out a product will help you understand where you have to concentrate your efforts to improve it.

• User-centric roduct optimization

Developing an MVP means having to think about the needs of your potential customers first.

• Cost effectiveness

• Investment opportunities

Thus, these examples prove that a properly developed MVP will become the foundation for your startup.

All these companies managed to turn their MVP into a prosperous business by concentrating on basics and leveraging the early adopters.

So let's figure out how to develop an MVP that will validate your idea and attract investors.

Target audience and its pain points

The identification of your target audience and understanding what problem they are facing becomes one of the most important aspects in the development of MVP which is fundraising-friendly.

The target audience is defined as the set of individuals who would benefit the most from your product or service.

It is a targeted approach, whereby you have to narrow down to a specific sector or group of clients, industry or group of customers.

In order to accomplish that, you need to look at your audience from the viewpoint of understanding what their needs are and what problems they face.

Clear and compelling problem statement

Now that you have chosen the target audience and determined the problems that they might be facing, you could proceed with formulating a problem statement.

By formulating a problem statement that effectively addresses one common issue faced by your team, you can make sure that everyone works towards achieving this goal. You will also be able to draw the attention of your audience while highlighting the significance of your offering. As long as the problem addressed in your problem statement is resolved by your MVP, you won't go wrong.

The problem statement must not only highlight the real issue, but also the market opportunity associated with this problem. As long as the market potential is sufficiently high, people will be encouraged to invest their money into such products because they can see the great ROI that they can reap from their investments. How is your MVP going to contribute? Make sure that you confidently say, "I am convinced that this is a problem and I'm ready to solve it."

Features that solve the problem

Finding the perfect balance between offering value to your users while at the same time not making the system overly complicated.

In this regard, it would be wise to use the 80/20 principle in choosing features for the MVP. Here you should choose 20% of the features that will offer 80% of the value to your clients. This means you should choose the most essential features for your app which will help solve the existing problem.

Preventing feature bloat

The feature bloat phenomenon refers to the situation where startups try to add all possible features to their products in order to win over their clients and gain investor's interest.

In practice, however, such approach may have some detrimental effects. For one, such approach may confuse your clients, making the product more complicated than it could have been.

Thus, you should strive to avoid adding too many features to the MVP and focus instead on those that solve the identified problem.

Demonstrating your potential

One of the main advantages of using a simple MVP with minimum features lies in the fact that through it you can show your potential and efficiency as a company.

Lacking any distractions, all the vital elements of your product become more apparent to customers, and as a result, they can evaluate your potential as developers and provide their feedback about it.

Reduced number of features at the beginning of creation means reduced time needed for its implementation. This can be beneficial to the investors, as it would showcase your efficiency as well as your speed of work.

MVP with minimum features can be considered a perfect way to further develop your idea. Through providing a simple version of your product and making improvements on it in line with the needs of your target audience, you will be able to implement the necessary changes much quicker.

In this way, you can prove your potential and willingness to further grow your product.

Demonstration of efficiency

It will be the simplicity of the product with minimum functions that will help demonstrate your potential and efficiency as a company.

There will be no other features that could distract people from seeing the most important characteristics of your application. Moreover, it will help people understand its potential and leave comments about it.

Minimum number of features in the first version of an app means minimum time required to create the product itself. It will be quite appealing for investors because they will see how efficient and quick you work.

Minimum features in the product will become an ideal way to further expand your idea. You will get feedback from your customers after introducing the application, and adding new features in accordance with your audience's needs will not take much time.

In such a case, you will demonstrate your competence and willingness to continue your development.

How does user experience help to validate your MVP?

User experience is essential for the validation of your MVP.

Positive user experience encourages users to work with the MVP. People will certainly use an application that is convenient and comfortable.

Constructive feedback is only possible from those people who enjoyed the usage of your MVP. They would willingly share their thoughts, which means that they'll become your company's supporters.

Good design suggests vision and professionalism

Your MVP's design must convey the idea of your brand and business vision. Having a clear identity helps to make your image professional and recognisable.

MVP will become the first impression of your company for potential users. Therefore, it should attract people, and also demonstrate how professionally you deal with your tasks.

The well-developed design will provide users with trustful feelings. It demonstrates your care about users' demands and willingness to create high-quality software.

Selecting the right technology

When selecting the appropriate technology stack, take into account the characteristics of your product and the capabilities of your development team. Make sure that it fits both your strategic plans and is appropriate for MVP development. Choose well-established and proven technologies tailored to your product's specifics.

Custom development should be chosen in case your project requires high-level customization. With custom development, you get full control over your MVP's features and capabilities. Yet, custom development often takes more time and requires qualified developers.

If there is a need for fast MVP creation, no-code/low-code platforms can be helpful. These technologies will help you to create a working prototype without much coding. They are especially useful for startups lacking the necessary development resources.

Cloud services, such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform, could come in handy when your MVP requires flexibility and scalability.

Building a basic functional version of your product

In order to develop your MVP, you should understand how to find the balance between simplicity and functionality. For this purpose, it’s important to take into consideration such issues as:

It is crucial to focus on the necessary functions and features of the product. It means that you shouldn’t go overboard with unnecessary functionalities.

It’s vital that your MVP works properly, and people who use it can have an excellent experience with your product. Therefore, you should make sure that your product doesn’t contain critical mistakes in its code. At least, at this stage of development.

Although this will be a primitive product, try to think about scalability.

User feedback integration

Ensure that you actively obtain feedback from the users when considering the development of your MVP.

Allow your customers to provide you with feedback on how to fix issues that are affecting them, offer suggestions on how to improve the product, and also share any other related feedback that may be available.

You could consider the adoption of analytics tools to help you gather insights into user activities. This will ensure that you act on the required changes based on user feedback.

Keep developing the MVP using the user feedback and releasing updates to the public.

Gathering initial user feedback

The gathering of user feedback and engagement information is the first step towards showing traction and validation of the MVP. Encourage the users to provide feedback using surveys, feedback forms, and any other form of communication. Analyze the gathered information to understand what works and where improvements should be made.

Analyze the data on daily active users, the duration of sessions, and the use of features within the MVP. This analysis could assist you in understanding how the MVP users behave.

Determine the conversion rate of certain activities or goals in your MVP. For instance, if the MVP requires users to sign up, calculate the rate of conversion of users from website visitors to registered users.

Use analytical software to analyze the behavior of your users. Look at trends, problems, and points of failure within the MVP.

Proving early momentum and user engagement

Early momentum and user engagement are good predictors for the future of your MVP.

Show how your user community is growing. It does not matter whether it is daily, weekly, or monthly active users – what matters is a steady growth trajectory, signaling an increasing interest in your product.

Point out your capabilities in retaining your users. High user retention means that the value proposition offered by your MVP is well-appreciated by users.

Tell real-life success stories of your users, highlighting the benefits gained by them when utilizing your MVP. User testimonials showing the value delivered by your product might be quite convincing evidence.

If users refer new people to use your MVP, it also demonstrates satisfaction with your product.

How validation can improve the credibility of your startup

Validation is useful in ensuring that there is minimized risk in terms of investments made on your startup since your startup is likely to succeed. The process of validation makes sure that there is a need for your product within the market. Your startup is therefore designed in such a way that you bear in mind the needs of your end user.

A startup with traction is highly attractive to investors because these kinds of companies are capable of growing at an incredible rate. Demonstrating that your startup is having some sort of traction through MVP is a good step towards earning profits from your company.

How to create a compelling narrative

To write an engaging story, you need to understand the basics of crafting a narrative. Creating a compelling narrative means sharing your startup's passion, mission, and future potential. But how can you craft such a pitch?

• Describe the origin of your business. Why did you decide to solve the problem at hand? Telling a passionate story will allow you to connect emotionally with your target audience.
• Explain what your startup aims to achieve. Investors are interested in working with passionate entrepreneurs who have a clear vision and ambitious plans for their business.
• Support your story with evidence and examples of satisfied customers. Share your user stories and testimonials to emphasize the impact your product has on people.
• Provide information about the market opportunity you're addressing. Show market size, growth, and trends.

Addressing the issue of solving problems by your MVP

Your MVP can solve real-life problems. Reflect on the problem statements you formulated at the beginning of this process. See if you can make the problem statement more personal and realistic. Explain why it’s relevant to the problem and how it affects your target audience. How does your MVP help solve their problems?

Back up your assertions with examples and facts. Give some ideas about how your MVP helps individuals or businesses in their daily activities. In what way does it help them gain an edge? How does it benefit them?

Concentrate on how it makes things different. Why should people prefer your MVP over others? What makes it unique?

Making sure that your pitch is relevant

It is important for a good pitch to be able to highlight the issues being faced by the target audience and the current trends in the market. Make sure that you explain why your MVP is going to be solving those pain points and fulfilling the aspirations of your target audience.

You need to keep yourself informed about the ongoing trends in the market and in the industry as a whole. Ensure that the current market trends feature in your pitch so that your business idea appears to be in line with the changing times.

If you have managed to get some success for your MVP in the market, make sure that you mention those instances. They will go a long way in validating the success of your MVP in meeting the market requirements.

Your story will surely impress the potential investors because of its relevance and adaptability.

Research

Several steps can be made to increase the effectiveness of your search for an investor who is going to become a perfect match for your startup.

• Firstly, identify the desired traits and characteristics of the investors. Think about what industries the prospective investor should have experience in, at what stages he/she usually invests and what geographical location he/she prefers.
• Check the investment portfolio of potential investors or venture capital funds. Try to find companies that they have been working with before which belong to your field of activity. It will prove that your interests coincide.
• Think about the successful cases of the investors or venture capital funds, about whether they have any exit history and the capacity to bring any additional value aside from the financial support.
• Ask entrepreneurs or advisors you know about investors who have a good reputation as supportive people who can work on the same wavelength with you.
• Use various internet resources where information about investors, their preferences and investments is provided.
• Finally, check up on the investors in order to be sure that they really have any interest in your field of activity.

Networking

Networking is one of the most efficient methods of reaching out to investors.

Attend industry-related events, conferences, and start-up meet-ups. Go for some events where potential investors or venture capitalists tend to be present.

Make an elevator pitch for your start-up. Explain what you are doing and why you have chosen to create an MVP. However, attend these events but also network with others who attend them. Ask questions, initiate conversations, and be genuinely interested in other people’s start-ups.

After meeting with investors, be sure to contact them through e-mail. Inform them of the great meeting and express your interest in learning about their businesses. Tell them more about your business and ask for a meeting.

Join online forums related to industries of interest.

Outreach

Introductions and warm contacts can be incredibly valuable in helping you forge meaningful connections with possible investors.

Use the network of contacts you already have in your mentorship, advisor, or entrepreneur network to help forge introductions with investors. Ask your contacts to give you a warm introduction to possible investors.

A warm introduction will be more powerful than a cold one. Upon receiving an introduction, remember to say that you have been introduced by a mutual contact, show interest, and describe why your venture is special. Thank your introducer for the referral.

Relationships are a two-way street. Be sure to maintain a good reputation within your professional network.

Structure of your presentation

As you will be presenting your MVP to the investors, it is important to make sure that the structure of your presentation fits the context of showcasing the importance of your MVP. Some pointers in the structure of your presentation include:

• Introduction: Begin your pitch deck with an attention-grabbing introduction. Explain the idea of your startup and what its purpose is.
• Problem statement: Talk about the problem that your MVP addresses. Give examples or stories as support to prove the problem exists.
• Solution/MVP: Talk about your MVP and its capabilities to address the problem raised above. Talk about key features/functions it offers.
• Journey: Outline the journey of developing your MVP and mention important milestones and lessons learned on the way.
• User impact: Talk about the positive influence of your MVP in users' lives or the business environment with user reviews/testimonials.
• Market opportunity: Show how your startup makes good use of the market opportunity with relevant data/statistics/facts.
• Traction/Validation: Highlight your user numbers/user feedback/partnerships that validate the traction of your MVP and its potential.
• Team: Mention who your team members are and show why investors shouldn't worry about making the wrong decision.
• Finances: Outline details regarding finances and any funding required. Let investors know how money would be spent. Ask: Be specific about what kind of help you need from investors.

Answers to potential investor concerns

Prepare yourself in advance for answering potential investor questions and concerns during your presentation:

• Market validation: You should be prepared to speak about market validation for your MVP. Provide information on user feedback and any market research or survey studies done.

• Competitor analysis: Deal with the issues related to competition and demonstrate your competitive advantages and barriers to entry.

• Monetization plan: Talk about your revenue generation plan, how you will earn money from your MVP.

• Scalability: Provide details about how your MVP is scalable to serve more users in the future. Describe the technology infrastructure and scalability strategy.

• Risk and threats: Identify possible risks and threats your company will face in the future and provide risk mitigation measures.

• Exit strategy: Investors will ask about your exit strategy for the company as well.

Visuals, data, and real-user stories

Make your presentation more powerful by utilizing visuals, data, and real-life examples of users benefiting from your MVP.

Make use of visuals, such as slides, infographics, and charts, to emphasize your points. Visuals help to make your presentation comprehensible and easy to remember.

Include data and statistics to back up your claims. Growth rates, number of user engagements, and other relevant information proving the success of your MVP will do the trick.

Provide user or customer testimonials about real cases in which they have benefited from your MVP. Examples of real-life situations add life to your presentation, making it more personal and relatable.

Demonstrate your MVP live in case you have an opportunity to do so. Alternatively, show prototypes of your MVP or at least its product mockups. This way, investors will have the opportunity to see the product themselves.

Map out the development of your MVP in terms of previous successes and future plans.

An effective presentation could make all the difference when pitching your MVP.

And now you have navigated through all crucial stages to develop your MVP that would assist you in gathering funds for your startup. Here is a list of the most crucial aspects associated with the development of MVP:

• First of all, there is a vital importance of the MVP concept and the role of MVP for startups.

• Understand your users, identify their pain points, and make a powerful problem statement.

• Furthermore, it is essential to define features which are significant for your MVP and can solve your problem without making it too complicated.

• Create an elegant and convenient user interface along with making correct design choices that would prove the professionalism of your startup.

• Create your product using an appropriate technology stack for developing your MVP.

• Obtaining first-time user feedback.

It seems that you have completed several critical steps in order to create an MVP capable of bringing investments into your startup.

Next step is creating a strong pitch by crafting a story, emphasizing solving aspects of the MVP, and making sure that your pitch matches with what's currently going on in the market.

Prepare to face all difficulties that stand in the way and be determined to overcome them and succeed. Create MVP that would allow you to obtain investments and change the world for the better.

Best of luck in your business endeavor!