Major industry players like Facebook, TikTok, Tinder, Uber, Instagram, Zoom, and Spotify have achieved tremendous success in their respective fields, thanks to their feature-rich applications and immersive user experiences. However, it wasn’t always this way. In their early stages, these platforms started with basic features and primitive UI/UX designs.
Take Facebook, for example. Mark Zuckerberg introduced the platform as a Minimum Viable Product (MVP) in 2004, initially targeting Harvard University students. The early version of Facebook had limited features like User Profile, News Feed, Friend Request, and Photo Album. Over time, Facebook evolved, adding more functionalities and becoming one of the largest social media platforms with over 2.99 billion monthly active users.
The success of Facebook highlights the effectiveness of building an MVP. It allows businesses to test their ideas with real users, make necessary improvements, and minimize costs before launching the final version. Building an MVP is a strategic approach to reduce risk, save money, and attract funding.
If you’re interested in creating an MVP for your business but unsure where to start, here’s a step-by-step guide to help you build a successful MVP capable of attracting investor interest.
Before delving into the MVP development process, let’s briefly explore the significant benefits that this crucial phase of mobile app development offers.
Top 4 MVP Development Benefits to Attract Investors
In recent years, there has been a substantial surge in the adoption of MVP development among startups. Businesses across the spectrum, from startups to enterprises, are increasingly realizing the manifold advantages associated with it. Consequently, MVP development has emerged as a pivotal stage in the product development process, especially for those aiming to attract MVP investors. Let’s explore the top four benefits it offers, ensuring a successful product launch and captivating potential MVP investors.
1. Investors can Check
In the realm of product development, the minimum viable product (MVP) framework plays a pivotal role in securing investment funding. It provides MVP investors with a tangible demonstration of the product’s functionality and how it addresses real-world problems. In contrast, products in early development stages can pose challenges in attracting investors, as the potential value may not be immediately apparent.
Furthermore, MVPs play a crucial role in ensuring a customer-centric approach to product development. They facilitate real user feedback, allowing for iterative improvements before the product reaches the broader market. This feedback is instrumental in shaping a comprehensive product, a crucial step before seeking MVP funding from investors. Additionally, by showcasing a dedicated commitment to the product, startups employing MVPs enhance their likelihood of success and draw the attention of potential MVP investors.
2. Investors can Ensure Product’s Viability in the Market
The primary objective of MVP app development is to assess the product’s viability in the market. This involves testing the demand for the product and gauging user interest in paying for it.
By allowing user feedback and modifications, MVP serves as a valuable tool in mitigating the risk of business failure and enhancing the likelihood of success. For investors, an MVP serves as a reliable indicator of a product’s potential success, aiding them in making informed and confident investment decisions.
3. Investors Rely on Your Team
A savvy investor recognizes that the success of any new venture hinges on the strength of its team. A capable team can turn even the most challenging project into a triumph, while a weak team is likely to falter, regardless of the inherent idea’s quality. This is why MVP investors often prioritize assessing the minimum viable product before committing to a new project.
A well-executed MVP development not only validates the underlying idea but also demonstrates that the venture’s team possesses the requisite skills and experience for success. If you’re seeking funding for your new project, it’s crucial to align with a reputable MVP development company, such as Appinventiv, known for impressing even the most skeptical investors. Appinventiv boasts a team of adept professionals with extensive experience in MVP building, instilling confidence in investors considering the product.
For instance, our dedicated team crafted a job search application, JobGet, transforming the entire recruitment process into a mobile-friendly experience. By incorporating AI technology for location-specific and time-efficient job searches, the app reduced the job-seeking process from days to minutes. This achievement led to JobGet securing substantial funding of $52 million, propelling it to become the leading recruitment app for blue-collar workers.
4. Investors can Check your Team’s Market Awareness
Conducting a thorough market analysis is a pivotal aspect of MVP app development, assuring investors that your team is well-versed in market conditions and adept at adapting to them. An effective MVP-building process involves comprehensive research on your competition, the core purpose of your product, its benefits, and unique features.
Investors are aware that MVP development demands substantial effort, research, and preparation beyond a mere pitch arrangement. They understand that resources wouldn’t be invested in its creation without a solid understanding of the market. Consequently, MVP building serves as a testament to your profound market knowledge, fostering trust among investors.
Real-World Examples of Companies that Started with MVP
We have a number of different real-life examples of industry leaders who stepped into the business world through an MVP and then turned that business idea into the brand name that is now leading the industry.
1. Snapchat
In 2011, Stanford University students conceived a groundbreaking idea for a social media platform that allowed users to share content that would disappear after a short period. This led to the creation of Picaboo, later known as Snapchat MVP, which initially focused on photo sharing. It quickly gained popularity, particularly among younger audiences. Over the following years, Snapchat expanded its features to include 10-second videos, Stories, and Chat. Currently, Snapchat boasts over 363 million daily active users globally.
2. Airbnb
Facing budget constraints, two individuals in San Francisco decided to rent out the top floor of their apartments to visitors. To test their business concept, they developed an MVP website featuring a basic landing page with pictures of their accommodations. The primary goal was to gauge interest from potential guests, and the response was positive. This marked the beginning of Airbnb’s journey.
3. Uber
Frustrated by the high costs of San Francisco taxis, Uber’s co-founders, Garrett Camp and Travis Kalanick, envisioned a service connecting iPhone users with cab drivers, complete with a credit card payment system. To validate this idea, they developed an MVP to assess travelers’ readiness for a new taxi experience. Today, Uber boasts a market capitalization of $95.58 billion, securing its position as the 152nd most valuable company globally. The evolution from the MVP version to the comprehensive application is evident.
How to Build an MVP
Developing an MVP requires a methodical approach and careful planning to craft a simplified version of your product, incorporating essential features that validate your app idea and elicit valuable user feedback. This iterative feedback loop is crucial for refining and ultimately ensuring the success of your final product. The following is a step-by-step guide to building an MVP that can captivate investors’ attention:
1. Conduct Market Research
The most crucial step to MVP development starts with conducting effective market research. Conducting market research helps you to understand the changing needs of your target market and what their requirements and needs are so that you can give the best possible service to them. Regular surveys are conducted by several platforms, which helps them to respond with the best possible solutions and sources to their target audiences.
2. Identify your Target Market
The next step in building an MVP is identifying your target market and the user persona. This includes identifying the demographics of your target audience by asking yourself several important questions, which include:
- Who is your target user?
- What are their needs?
- Why would they use your solution?
Once you figure out these essential questions you can easily determine your target audience and what are the most crucial needs which need to be addressed at what particular time.
3. Outline Key MVP Features
Now when you are aware of your target audience and their needs, it’s time to outline the key features for your products. In this competitive market, it is very crucial to differentiate your product from that of your competitors. This includes identifying the core functionalities for your MVP solution and services. Less is always more when we are talking about the minimum viable product. Hence, you must focus on the essential features that are related to your target audience.
4. Build and Launch MVP
After finalizing the feature list, proceed to the development and launch of your MVP. Collaborate with an MVP development company to create a user-friendly product and release it to the target market. This phase includes actively promoting your minimum viable product and actively seeking user feedback for valuable insights. The feedback becomes invaluable in shaping your product’s evolution, guiding decisions on feature additions or removals, and providing direction on overall product or service enhancement.
5. Analyze the Feedback
Once you’ve launched your minimum viable product, it’s crucial to analyze user feedback to understand what aspects are effective and identify areas that need improvement. It’s essential to acknowledge that a minimum viable product will inevitably have flaws and areas for enhancement. The insights garnered from user feedback and data analysis serve as valuable inputs for refining your product, paving the way for the development of a fully-featured version that caters to the needs of end-users.
While there’s no universal formula for building an MVP, the aforementioned steps provide a solid starting point. It’s important to keep in mind that the primary objective of developing a minimum viable product is to attract investors. If your product fails to capture investor interest, it’s prudent to reconsider investing valuable time, money, and resources into the project. Keeping this goal in mind, let’s explore effective strategies for finding investors for your MVP project management.
How Much Does it Cost to Develop an MVP?
Understanding the steps involved in building an MVP, entrepreneurs often grapple with the crucial question of development costs. While the expense of creating an MVP is generally lower than the total app development cost, it can still be substantial if critical factors are not carefully assessed. On average, the cost of building a minimum viable product can vary between $15,000 and $150,000, contingent upon multiple factors. These factors encompass the product’s complexity, functionality, UI/UX design, the geographical location of the MVP development team, and the industry in which the business operates. Therefore, a thorough consideration of these factors is essential in MVP software development.
For example, the cost of an MVP for a video-calling app might fall within the range of $30,000 to $50,000. Similarly, an MVP for a food delivery app or website could cost between $42,000 and $51,000, while an MVP for the real estate sector may hover around $45,000.
Despite being typically more cost-effective and less risky than traditional product development, MVPs hold a strong appeal for investors. To obtain an accurate estimate of MVP app development costs, feel free to connect with our proficient team and initiate a discussion about your product idea.
How to Find Investors to Raise Funding on Your MVP?
When embarking on a project, the foremost concern for an entrepreneur is often how to secure funding. If you’ve successfully developed a minimum viable product and are now in search of potential investors, here’s what you should consider.
1. Research about Investors
Securing funding for new products, applications, or services can be a formidable challenge, despite the brilliance of the idea. To enhance your likelihood of success, meticulous research on potential investors is essential. This involves delving into their MVP investment history and comprehending their objectives.
Aligning your product with their specific interests significantly increases the chances of securing MVP funding. Additionally, during economic downturns, being attuned to the needs of potential investors becomes crucial. In such phases, investors tend to be more financially conservative and risk-averse compared to more prosperous times.
2. Focus on the Future
When presenting your product to potential investors, emphasize the future rather than dwelling on the past. Shift the focus towards the potential of your product and its capacity for growth. For instance, when pitching a new social media app, emphasize the prospective user base and how individuals will utilize the platform for meaningful connections. The crucial aspect is to persuade investors that your product holds substantial potential for future success and that their investment will yield significant returns.
3. Create a Pitch that Resonates the investors
Once you are done with making the list of the potential customers, now you are required to make the compiling pitch that effectively resonates with them. Which includes focusing on the most crucial task at that time, and keeping the rest on hold.
For instance, if you’re having a product related to a food delivery app, you should focus on how you can grow your online ordering and delivery trends. Additionally, you can also add on with your potential customers, who are with your organization from the beginning and how they have helped your business grow.
4. Be Prepared to Answer the Questions
You must always be ready to answer the volley of questions, when you are pitching a minimum viable product to your potential customers. This in short means that you are being honest to the rest of your customers, because in this you need to answer to all the challenges that your organization faced and what were the possible results which you took to get yourself out of that situation.
By being honest with the risks that your organization can face, you give your audience an overview and a clear picture about all your possible happenings that can affect the organization growth, and this also gives some time to the organization to get themselves ready for that unwanted situation.
5. Optimize your Cash Position
Before you are going to pitch your product to potential customers, it is very important to optimize the cash position. Which means, you as an organization need to ensure that you have enough cash in hand which can easily help you to get out of some of the unwanted circumstances. Along with this, you should also have a well crafted plan, which includes what are the areas where you will be spending your money.
Assuring your investors about the plan you have so that they can confidently invest in your organization is also very important. This not only helps your organization to make its name, but it also helps your organization to invest in the key areas precisely and make the best possible result out of that.
Types of Funding Partners for MVP Funding
While MVP app development is a crucial phase for any business, it’s important to note that it doesn’t represent the final stage. To propel your business to the next level and attain long-term success, let’s explore key sources of MVP funding that are beneficial to approach, especially during pre-seed funding and seed funding rounds.
1. Community Development Financial Institution (CDFI)
Numerous CDFIs focus on investing in businesses within low to moderate-income (LMI) communities. While their primary goal is economic development, they also support businesses that contribute to job creation and overall economic growth. Consequently, they serve as a valuable funding source for ventures looking to launch in LMI communities.
2. Government Agencies and Programs
Governments at the federal, state, and local levels offer a range of programs and incentives to foster entrepreneurship and economic development. These initiatives may encompass loans, grants, and various forms of financial assistance.
3. Angel Investors and Venture Capitalists
Angel investors and venture capitalists, often high-net-worth individuals, specialize in investing in early-stage companies in exchange for equity. While their primary focus is on high-growth ventures, they can also provide funding for minimum viable products with substantial potential.
4. Crowdfunding
Crowdfunding involves raising capital by aggregating small amounts of money from a large number of people. This method can be an effective funding source for MVPs that possess a compelling narrative and can generate interest among potential investors.
5. Friends and Family
Friends and family members can be integral contributors to MVP fundraising, especially if they share enthusiasm for your business idea and believe in your capability to succeed. It’s crucial to recognize that they, too, are taking a risk by investing in your company, warranting the same level of respect as any other investor.
Embark on Your MVP Development Journey
MVP development plays a pivotal role in the fundraising journey for your software or application, acting as a decisive factor in the success of your final product and business concept. Notably, industry giants like Airbnb, WhatsApp, and Facebook all commenced their journey as MVPs, evolving into unicorns within their respective sectors.
To ensure successful MVP building capable of attracting funds, it is essential to collaborate with a reputable app development company such as Appinventiv.
The MVP development process at Appinventiv closely aligns with the steps outlined above. Regardless of the complexity or scale of your project, our proficient team is dedicated to transforming your visionary idea into a reality for millions of users. Through our MVP development services, we’ve successfully crafted numerous products for global clients across diverse industries, contributing to an impressive total funding of $950 million.
For example, our skilled team created Vyrb, an audio-commanded social media app. By integrating audio command features for posting, listening, and responding to social media content, Vyrb secured over $1 million in funding, thanks to this next-gen functionality.
Another success story is Edmundo, for which we developed a financial literacy and smart money management app, establishing it as the world’s first financial intelligence hub for kids. The app facilitated strategic partnerships with Visa and NymCard, securing pre-seed funding of $500,000.
