VC or Customers — The Dilemma

On top of validating your market idea and starting to build your customer base, the Minimum Viable Product can help you attract investors. Many VC funds won’t invest a dime in a product or idea that hasn’t been tested in the market yet. Unfortunately, that’s where things get tricky. A lot of startups believe that if their MVP appeals to the Venture Capital (VC) funds, they will get more money from them. While it’s true (and obvious) that VCs will look at your product, serious investors are interested in its market potential. And if your customers don’t like the product, no amount of funding will save you.

That’s why it’s so important to build your MVP with your customers (not the VC executives) in mind — from day one. Of course, you need to do your homework first. And if you want to make sure your MVP is developed in a way that’ll allow you to test the market needs of your customers, check out our Rapid MVP Development service.

Why is your idea going to work?

To answer that all-important question, you’ve got to think about the customers and their needs. All successful products ever created had one thing in common: they solved someone’s problem. Similarly, an estimated 42% of startups fail because there’s no market need for what they offer. Whether you're working on a new app, a new cryptocurrency or a revolutionary SaaS product, if you want it to be successful, it has to solve a problem its future users have. Simply speaking, you need to split the above question into two and find solid answers to both halves: • Why do your customers need the product? • How is it going to make their lives easier?

Naturally, if you want your MVP to be successful, its features have to solve that particular core problem that you identify here. Once you know what the problem is, it’s time to find out if there is already someone trying to achieve the same. Once you find them, you’ve got to see if you can beat them!

Analyze your competitors

Now that you know the problem that you want to solve, it’s time to get real. Let’s face it: unless you have a truly revolutionary idea, someone out there is working on something similar. A product or service like yours might already be out there.

However, that’s actually a good thing. Your competitors have probably already validated at least a small part of your business idea for you. This means that you will be able to focus on what differentiates your business the most: your Unique Value Proposition (UVP). For example, you might be able to solve that problem faster or in fewer steps. Or in a more secure way. Your product might be a lot more user-friendly, allowing even non-technical people to use it without any effort. There are thousands upon thousands of possible combinations. Analyzing your competitors before building your MVP with your potential customers in mind gives you one other very important benefit. By analyzing their feedback on similar solutions, you can find exactly what people want to see improved — and then focus on developing those particular features. Analyzing customer feedback is also the first step to finding your Minimum Viable Audience (MVA).

Find your future users

No matter how confident you are that your idea is the best idea in the world, if you target the wrong people, you won’t make a cent. It may be tempting to try and hit the mass market right away, but it won’t work. Even corporate giants like Amazon or Facebook were initially created with a narrow audience in mind. Instead of trying to hit the mass market, you should look for the smallest segment possible. It’s better to build a relationship with 1,000 loyal product evangelists who will love your product and can help you attract more customers with their word-of-mouth marketing than with 10,000 random people who may or may not care about your business. Plus, the engaged fans are often more eager to provide you with invaluable feedback. Not to mention that choosing a smaller segment makes it easier to target the right customer needs. Advertising to a small audience is also much cheaper and more effective. All that makes testing your hypothesis way easier.

To identify your ideal users, start with analyzing the demographic data. Consider things like age, gender, location, education, and occupation. Depending on your product, there might be other questions to answer. For example, if you were creating a traveling app, you could ask and answer the following questions: • Do your users travel alone? • Do they prefer packaged holidays or do they want to organize everything themselves? • How often do they travel? • What’s their travel budget? The more you know about your users and the more specific you get, the easier it’ll be to create a product that they really need and promote it later on.

Map out their journey

So, now that you know who your customers are and what problem they need you to solve, it’s time to find their end goal and identify the actions that they need to take to reach it. Imagine that you are working on a new Airbnb-type app — here are the core actions your user needs to perform to book accommodation:

Create a Profile > Create Accommodation > Book It > Accommodation Booked Action Action Action Goal

Of course, don’t forget that there are two distinct user groups that you need to consider in your MVP — those who will book the accommodation and those who will post the accommodation listings. The process for the posters will work something like this:

Create a Profile > Create Accommodation Listing > Post It > Offer Accommodation Action Action Action Goal

Knowing these necessary actions is essential for two things:

  1. It helps you find, understand, and fix potential obstacles that your users might come across when trying to perform a particular action.
  2. Knowing the actions necessary to perform a goal allows you to prioritize features that are critical for your customers in your MVP.

As you can see, it takes just three actions to book a room (assuming that you ask your users to create a profile, but it makes little sense to allow them to book something without one). Obviously, there are other actions one could perform to achieve the goal: filtering search results, chatting with the accommodation’s owner… However, considering that 45% of all features in production are never used, your MVP should focus on the absolute core features. When deciding what features to include, don’t forget about the things that make up your Unique Value Proposition — on top of providing the core functionality, you need to provide your users with something that will make them choose your product or business instead of your competitors’.

You’ve Got the Features List. Now What?

Once you have all the data about the market, your customers and which features you want to focus on, it’s time to get your Minimum Viable Product developed. But before you reach out to a software house, let’s answer one more question that we are frequently asked by startups: how “minimum” should you make your MVP? Remember that no matter how tempted you are to show your audience everything that you’ve come up with, your MVP is not about trying to sell them the full functionality.

Developing your MVP is not about creating a mockup of your product or a beta version of it. Your Minimum Viable Product is about checking whether there is enough market demand for your idea. It’s about testing a hypothesis using a set of core features. If you do all that analysis right, choose a specific audience to target and address their key problem, you’re several steps closer to a successful MVP — one that wows your customers and makes them want to sign up from day one.

The Next Step

Start developing it! The sooner you start, the earlier you’ll hit the market. Timing is everything, as you might recall from the beginning of this post.That’s where we can help. Reach out to us with your idea, and we’ll help you make it a reality and prepare it for a market test.