Ask any venture capitalist, angel investor, or loan officer how many times they’ve heard an aspiring entrepreneur walk up and say: “My startup idea is flawlessly planned! All I need is funding!” They’ll tell you that if they’d figured out a way to make a living off that statement they’d likely be wealthily retired.
Before you crank out long hours coding that killer algorithm into your module; before you increase your carbon footprint by filling your bin with crumpled business plan drafts; before you caffeinate yourself and the rest of your team into zombie-mode, take it easy. There’s a simple formula for ensuring that your startup gets the funding that it needs when it needs it. Funded MVP is equal to Funded Startup.
The Dropbox Story Did you know that Dropbox started as an MVP? Here’s a really interesting story from Eric Ries.
The MVP (minimum viable product) is the only version of your startup that you need to worry about getting funded. In fact, sometimes the issue here is not even funding but validated learning about the assumptions of your startup. If your startup idea cannot generate interest, engagement, and/or sales in its MVP version, then you seriously need to consider whether the venture is worth pursuing at all. This will save you resources, energy, and the time to move on to your next great idea.
Strip down your startup idea to its core value proposition and formulate that into an MVP. This could be a landing page, a PDF, an email, or even a question. Gather the metrics you’re searching for to find out if your startup idea has potential. If it adds up, your road to finding the right funding model just became a lot easier.
In our last interview with Shed Simove, he explained this principle in the simple terms:
…the first step is to bring your idea to life in a basic way. This is highly important. By having a 2D design or 3D prototype – or even a visual mockup of a service, it suddenly gives your idea a huge boost in power. You can then show it to people, pitch it around, look at it yourself and think how it can be improved. You should never spend a fortune at the start. Bring your idea to life in a basic way and see if anyone is interested. Even if they’re not interested and you still are: then plough on!
Richard Reed also explained how him and his team started Innocent Drinks with £500 and a stand at a festival. The MVP idea is tried and true and championed in startup books like The Lean Startup,
The Startup Owner’s Manual,
and Getting Real (to name a few).
Don’t only apply the MVP approach to your startup, apply it to new features you’re intending to implement as well. If you haven’t grasped how to make an MVP work for you then it’s a knowledge gap you need to fill as soon as possible. Join us at Business Funding Show ’16 where we’re gathering to discuss all the aspects around successfully getting your business the investment it needs to rise to the next level.