Investor before MVP?
The startup ecosystem has become a “how to find investors to build my idea”. There are lots of blogs, books about how to create your pitch deck, what to prepare for being desirable for investors.
You’ve got a very good idea and believe that it will be a huge hit on the earth. Of course, you don’t know your potential customers but you’ll get to it later when MVP is ready. Rather, it’s more important to find investors asap as you don’t want to take the risk to validate your product or service.
You create a fancy pitch deck and you find the first potential investor via your friend’s network. Hurray, it should work as it is a fantastic product you invented. Pitch day has come, but the investor doesn’t get it what you have dreamed. You don’t understand why. Maybe the pitch was not correct so you start to fine-tune it and pursuit another potential investor. For this, you read more content and ask those who already got money about the technics.
Meanwhile, you don’t have time to work on the product as after a good working pitch, an investor asked for more information, a business plan, and a detailed P&L.
Even if you “are” lucky and get the investment you feel in a forced situation where you should focus on getting revenue before you validate the product.
In the end, you have an MVP that has no organic users nor customers but you spend hell amount money on ads that are performing very poorly.
So what are you supposed to do?
There’s no ultimate solution but a reasonable way could be the next.
Know your potential customers
Before you do anything you should know your target group. It’s obvious but very few startups target precisely. Even better if you can name each person who probably will pay for your solution. If so just ask them about their pains, goals, and expectations. You can make some interviews and quantitative researches and/or analyze competition in order to find your unique value proposition.
Make MVP within couple of weeks
You don’t have to develop everything you think your potential customers want. Put the product in live as soon as possible.
Most startups misunderstand MVP. It’s not about half-done functions but very few functions that are done.
Of course, along with Lean frameworks, you have to measure and develop. This way, you can go very focused and develop only which is needed.
Reach product-market fit
If your users are paying for your solution you haven’t reached the product-market fit yet. It is happening when users look for your products and pay without any marketing push.
And when should you raise capital?
Should you? What I’ve written is all about bootstrapped businesses. No money is needed to go through the steps above.
Of course, there are lots of cases when you need investment but many times it is when you’ve created a scalable product that you want to scale.
What about your solution?