Imagine pitching to investors who are keen on your idea and would LOVE to see an MVP before making up their minds… but you don’t have one!
Not having an MVP could be the deal breaker for some investors who pass on your tech startup. They were keen but they wanted to see some evidence of revenue before they get on board. And in a world where 90% of startups fail, you need to do everything possible to increase the odds of you winning over investors and getting funding. And when I say everything possible, I mean creating an MVP that an investor can see, touch, and use - and which will let you validate your own market hypothesis.
Don't have any tech-related knowledge? You might need a CTO. If you'd like to learn how to find and verify a CTO, feel free to check my latest articles: How to find a CTO for your startup and What should a CTO know?
Steve Jobs understood this, which is why the iPhone was originally an MVP.
Think you can pass on something even Apple didn’t? Let’s take a look at a few reasons why you need an MVP for a tech startup before speaking to investors.
An investor might not ask you outright to show them the money - but, boy, it helps if you can pre-empt them and indeed show them the money.
An investor is only interested if a product is capable of making revenue. After all, that’s what they’re here for.
Imagine if you’ve got an MVP that’s already making revenue? The odds of you winning over an investor suddenly increase exponentially.
If an MVP is building up revenue in its early, most primitive stage, it means only one thing - it will continue to make money once you’ve tested the market some more and enhanced it with more investment.
People already love it
Your product is already out there - and people are loving it. For investors, this is awesome stuff. As Malcolm Gladwell points out in The Tipping Point early adopters - especially those in influential positions - can convince a huge chunk of your target market to get on board, too.
The best place to find your early adopters is on the Internet - specifically social media. Find them, reach out to them, engage them, get them to share your content, and gather the numbers.
Your early adopters and the information about them are leverage. Create an MVP, get customers on board, and show investors that you’re building momentum too good to ignore.
You’ve made the first investment
An investor might be thinking about putting up some funding. But they might be put-off by your own lack of investment. Without an MVP, you’ve shown an investor that you don’t care enough about your own product to invest time, money and resources into a prototype. Instead, you want others to front up the cash first.
MVPs are typically paid for by the startup themselves. As such, it shows an investor that the startup cares a lot about their idea. They want this to work so much that they’re prepared to put their own money into it. And this can be hugely attractive to an investor.
If you need help with building your MVP, we'll be more than happy to help you. We have all the tools and people to develop a successful MVP. Drop us a line at Krzysztof.Marszalek@rst-it.com and we'll get back to you as soon as possible.
You’ve got more than an idea
An investor might take a chance on you if you’ve got a compelling idea. But the chances of them taking you seriously are increased when you’ve got something concrete.
Everything starts with an idea. But we give life to an idea by acting on it and turning it into a reality. Investors aren’t interested in dreamers and their dreams - they’re motivated by doers and their actions.
Your MVP is essentially a functioning idea. It walks, it talks, it makes cash. It’s a dream turned reality that’s taken wings.
Investors deal in numbers, data, metrics and all things tangible. So turn your idea into an MVP and give them results and not just a plan.
Lastly, let’s say you’ve got an MVP that you’ve already tweaked at least once. This shows investors that you’re willing to adapt and adjust to feedback and market shifts and stay one step ahead of the competition. You’ve got foresight, ingenuity and that one thing all good business people have - flexibility.
In the words of Missy Elliot, you’re going to flip it and reverse it.
MVPs don’t cost you much time, effort or cash to create. They’re quick to put together and their ROI in terms of who gets onboard with your idea can be very high. Moreover, it gives your pitch an added dimension.
Of course, MVP isn’t all you need to convince investors to get on board. You also need to show them you’ve got the right team, the market opportunity and agility. Good luck!